About the Short Sales Insider

The Short Sales Insider has worked in the real estate industry for several years in various capacities. One of the major areas was in the foreclosure market. However, with the current state of the economy and especially the real estate industry in general, it became very apparent for another avenue to approach real estate investing.  Not just homeowners, but banks are in a precarious position.  Both sides need to work things out or everyone suffers.

The main areas for these negotiations are short sales.

There is now a great opportunity to train and equip everyday people to do short sales and profit from a wide variety of residential real estate and taking advantage of the fact that banks will do almost anything to prevent taking back a property onto their books.  For every dollar of bad debt such as this, banks are penalized – each dollar equates to SEVEN dollars that henceforth cannot be lent out in traditional fashion.  This is a huge incentive for the banks to do anything possible to keep a foreclosure from coming back to them - this is why short sales are so popular.

Result – the Short Sales Insider Guide, a complete kit, was created for the sole purpose of training anyone the art of succeeding with short sales. 
Real estate investors and potential property owners are trying to take advantage of the huge short sale market opportunity, but do not know the key inside information to execute these deals.  No one has taken the time and effort to put together a Step-by-Step program and kit to ensure success...until now.

This complete kit, the Short Sales Insider Guide, is going to show you the most effective process to successfully acquire properties at deep discounts via short sales. It is written in a plain and simple manner for this purpose.
 
The strategies are all proven and the system used will result in the best opportunity for success with all types of short sales.

Overview

Benjamin Franklin said “In this world nothing is certain but death and taxes”.  He forgot to include short sales. 

Regardless of economic conditions, there are always ways to profit from real estate and opportunities always exist.  This includes the person who is just looking for a great deal on a home to live in. 

Millions of people each year find themselves without a job, in a distressed situation, in an emergency situation, and upside-down on their mortgage.  The art of locating these deals and doing short sales allows for you, the Short Sales Insider, to get involved in a win-win-win situation:

You can help the owner of the property by providing them a way to avoid foreclosure

You can help the bank avoid taking that property back on their books and the added expenses of foreclosing on the property

You can help yourself by making a nice profit on the transaction or simply getting a great home at a great price

Thus, being a Short Sales Insider becomes a way of helping others that is naturally enjoyable, but also very rewarding. This special kit was created to give you an overall understanding of short sales.  More importantly, this kit can be further used, with its straightforward Step-by-Step process, to ensure the best chance of success in closing the short sale.

With so many homeowners “upside-down” with regard to their equity position, short sales are often the best option to look at.  Most home buyers and property investors might turn away and look for another deal when this is the case.  However, developing expertise in short sales opens up new opportunities to profit in real estate.

Short Sales Insiders have the clear advantage since most people don't understand the process.

Remember, the last thing a bank or lending institution wants is to take back a property onto its books.  The foreclosure process is often long, drawn out, and expensive.  It is many times in the best interest of all parties to agree on a short sale.

This is the "Perfect Storm" for Short Short Sales

Most people get frustrated when they look at this down economy.  Actually, what most people think is a problem is actually a huge opportunity.

I have taken advantage of the recession and so can you.  If you are seeking to make a lot of money in real estate, it doesn’t matter how little you have. You can buy short sales and have financial freedom like you've only dreamed of.

A foreclosure occurs when a property owner cannot make principal and/or interest payments on his/her loan, typically leading to the property being seized and sold.

A short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property. In a short sale, the bank agrees to discount the loan balance due to an economic or financial hardship. That is, the bank releases title to the buyer at a price that is less than the outstanding loan balance. This is basically how you can buy short sale homes.

The negotiation for this is all done through communication with a Loss Mitigation department of the bank. The home owner sells the property for less than the outstanding balance of the loan and turns over the proceeds of the sale to the bank. Sometimes this can be done to the full satisfaction of the debt. In this case, the bank would have the right to approve or disapprove of a proposed sale.

Short sales can leave a deficiency balance for which the home owner may be still liable. This can be avoided with the proper negotiation of the sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation. It is a consideration when you buy short sales.

A short sale typically is executed to prevent a home foreclosure. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. Short sales are especially attractive to banks during times of recession. This is because the bank has to re-sell the property after foreclosure to get it off their books. And, the last thing a bank wants if a bunch of property on their books – for every $1 of bad debt a bank has, they are precluded from lending out $7.

For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. So, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer. This is an important factor when you buy short sales.

Negotiating Short Sales

Banks have a department (typically called "loss mitigation") that processes potential short sale transactions. Normally, banks do not accept short sale offers or requests for short sales until notice of default has been issued or recorded with the locality where the property is located. However, given the unprecedented and overwhelming number of losses that banks have suffered from the current foreclosure crisis, they are now more willing to accept short sales than ever before. So, it is much easier to buy a short sale home during a recession.

This is great news for home owners who are “upside-down” on their mortgage or deed of trust. In other words, they owe more than their property is worth and are having trouble selling to avoid foreclosure because of this. These are the types of distressed sellers who need a short sale the most.

The lee-way a bank has for short sales and mitigated losses varies a lot. Most banks have an established criterion for these types of transactions. Some of the more creative banks allow any reasonable offer as long as it is approved by the loss mitigation department.

When you buy short sale homes it can often become very complex with often several layers of approvals and varying conditions. Second mortgages and other subordinate loans may also need to approve the short sale as part of the overall negotiation.

Tax lien and mechanic’s lien holders frequently object to short sales and can prevent a short sale. If the bank required mortgage insurance on the loan, the insurer may also be involved in the negotiations since they may be asked to pay out a claim to offset the bank's loss on the sale. Since a wide array of variables and different people and organizations can get involved in a short sale, they often have a high failure rate unless they are handled by a seasoned professional or someone trained on how to buy short sales.

The best way to learn short sales is to get your feet wet by jumping in. When it comes down to it, you are going to learn most by trial and error. This is because each bank or lending institution is different – they all have different policies, short sale packets, and loss mitigation techniques.

Experience is also gained and expertise formed by networking with real estate agents who specialize in short sales, short sale negotiators and loss mitigation specialists.

A short sale does not hurt a person’s credit report as badly as a foreclosure. This is because short sales are a type of settlement, rather than a seizure. Usually, it is possible to obtain another mortgage less than three years after a short sale. Keep this in mind when speaking with the owner when you are buying a short sale home.

This is where negotiating a deal that forgives the remaining balance owed by the seller is very important. If the bank is motivated to move the property and the prospects of a foreclosure are looming, it can be done.

Short Sale Package

Hopefully, the lending institution will provide you with a generic short sale package or some more details on their requirements for submission of a short sale. You have already gathered the required data, forms, authorizations, and signatures.

If you are unable to obtain any specific guidelines from the lender, then submit your own short sale package.  It is very helpful to organize and present the package very professionally.  First, send it via fax to the Loss Mitigation Department to the attention of the appropriate representative.  Then, send it UPS or FedEx, requiring a signature.

Put your package into a clear-fronted, presentation binder (the kind with a spine and 3-hole tabs).  The cover page should include the basic information – Loan #, Property Address, and Homeowners’ name(s).  A picture of the front of the house is a plus.  It is also helpful to divide the folder up with section tabs.

Here is what the “package” should look like (after the Cover Sheet/Page):

1)         Cover Letter
2)         Authorization to Release Information
3)         Agreement for Purchase of Real Estate
4)         Hardship Letter with copy of Drivers License
5)         2 Most Recent Pay Stubs
6)         Last 2 Years Tax Returns (W-2’s Included)
7)         2 Most Recent Bank Statements
8)         Borrower Financial Statement
9)         Settlement Statement – HUD-1 Estimate
10)        Escrow Letter
11)        Repair Estimate
12)        Pictures

Short Sales Success

As you can see from the above process, the best way of dealing with short sales is to locate the potential foreclosure before the county records the delinquency as a notice of default (NOD). This is because when the notice becomes public information, then everyone else has easy access to that information. The added competition makes securing the property more difficult since other investors will be trying to do the same thing. This is one of the most critical success factors when you buy short sales.  

Some banks, however, will not accept a short sale unless the NOD has been given. So, even though you have located a deal in which the notice of default is eminent, you might have to wait until this actually happens. But, since you have been working with the owner all along, you will have time to compile the information necessary so that you can quickly submit the proposal to the bank. This is important since time is often of the essence.

For distressed owners, the recession helps because banks are more willing than ever to accept short sales.  If you need to get out of a bad financial situation and owe more on your home loan than your home is worth, you can still salvage a lot with a short sale.

This is definitely the "Perfect Storm", but it won't last forever. We may never see anything like this again in our lives.  Don't miss this opportunity. 

“This guide is a direct answer to the economic and foreclosure problems we are encountering today.  However, this “down” market is actually not a problem – it is an opportunity.  We are confident that you can benefit from this situation just as thousands of other professionals are doing right now.  We hope that you can build a long-term approach to your financial future using real estate to propel you to obtaining your personal goals and dreams.”

- Short Sales Insider

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