The Definitive Guide to Negotiating a Short Sale and Realising Massive Foreclosure Profits

Real estate investors stand to gain substantially from purchasing foreclosed properties. Nevertheless, a large portion of these homeowners are heavily indebted. They owe a lot of money and have no equity. Actually, a lot of people have more debt than their property is worth!
Since there is no clear method to make money from these ventures, most investors will pass. But if you negotiate a "Short Sale" with the lender or bank, you can "create" equity on your own.
A short sale is...
As a real estate investor, your objective in a short sale is to get the bank to accept a lower sale price than what is owed as full payment. The idea is simple, really: just purchase the foreclosed property from the bank at a steep discount, fix it up, and then sell it for a profit!
The Mortgage Holder Short Sale Negotiation Process
You will be prepared to deal with the bank's loss mitigation department once you have obtained a contract from the homeowner and all of your paperwork is in order. Successful short sales require coordination with the bank's loss mitigation division. Even though short sales are seen by most lenders as an unfortunate reality of the lending industry, it doesn't imply the bank will automatically comply with your requests.
Grasp the Viewpoint of the Bank
The bank's loss mitigation department is extremely busy, if not completely overwhelmed, due to the 52-year high in foreclosures. Make the most of a bad situation by convincing them of the merits of your short sale.
Lenders benefit from short sales contracts because they allow them to get rid of unproductive property and avoid foreclosure costs. The following are examples of such expenditures: marketing, repairs, bankruptcy, and court fees. Plus, that's on top of the $300,000 to $800,000 (or even more!) that most lenders keep in reserve. This reserve is mandated by federal rules and is typically several times more than the bad debt's actual value.
It is imperative that you, the investor, remember these advantages. Ultimately, it is your responsibility to persuade the lender that minimising their losses is the optimal course of action.
Improving your bargaining abilities is a must. To aid you, I have outlined three steps.
First thing to do: Gather All Necessary Documents
Prior to submitting your offer for the short sale, you must gather the necessary documents that is required by all lenders. Second, there is often a separate short sale package (set of paperwork) that larger institutional lenders require.
Bring all of the necessary paperwork to the meeting with the homeowner so you can get their signature on it. Please ensure that the homeowner completes and signs:Disclosure Authorisation (the homeowner's consent for the bank to contact you)Legal Documents: Agreement to Purchase and Sale Letter of hardship (explaining why homeowner is unable to pay mortgage)Detailed accounting report (including all assets, liabilities, income, and expenditures)Net sheet or estimated HUD1 (which shows the bank what they will receive)

Ask the lender if there is a specific package they are looking for as a second step. A simple phone call to the lender requesting a fax of the package should do the trick. Call the homeowner and collect their lender information; then you may gather the necessary paperwork before visiting the residence.
Second Step: Communicating with the Loss Mitigation Section:
Getting your call directed to the correct individual at the bank is one of the initial hurdles you'll encounter. When you phone certain banks and enter the homeowner's account number, the call is automatically forwarded to the right department.
Find the Loss Mitigation Department by calling around if the bank does not have such a system. Because this division goes by different names at different banks, you can find yourself getting passed around from one branch to another. You could also want to consider "loan modification" or "foreclosures department" as possible alternative names.
When you finally get to the correct person, be sure to introduce yourself and act patiently and politely. This individual has the power to seal or derail your agreement. Having a script or outline of the talk at your fingertips might be quite beneficial.
Be sure to address the following when you chat with them:Come on, introduce yourself.You must identify yourself as the homeowner's agent and provide the account number.Get the fax number by enquiring.Notify them that you are faxing a "authorisation to release information" in order to facilitate communication with the loss mitigator.Keep talking on the phone while you send this data by fax.Make it clear that you're hoping for a quick sale.

Talks start as soon as the necessary documents are in hand.
Third, start negotiating.
The way each bank handles short sales reflects its unique character. Some companies instruct their staff to initially display reluctance. Reasons for this include the fact that many investors who call them want to know how to make a short sale yet have no idea what they're doing! On average, a loss mitigator's desk will include 80–300 files. They are too busy to teach you, plain and simple. Make it clear that you're not requiring their help.
It has been suggested that new investors should not announce their intention to invest in a property. The best course of action, though, is to be forthright and declare that you are purchasing the house as an investor.
Both sides can better understand their responsibilities and the areas that require negotiation when communication is clear and unambiguous.
The following should be highlighted while conversing with a loss mitigator:
First of all, you have experience and expertise as an investor. Make it clear that you aren't trying to steal their property, even though you do want to earn a profit.
2. You recognise their busy schedule and value the time they are dedicating to negotiating with you. Determine what can be done to alleviate their burden.
3. Keep in mind the items that will sell. The bank's goal is to sell off unwanted property without suffering a significant loss, whereas the homeowner's goal is to avoid bankruptcy. Yes, you are attempting to earn a profit, but you aren't trying to take advantage of them. It's clear that you're attempting to capitalise on your strengths by applying your expertise.
4. A short-sale benefits all parties involved!
Following your conversation with the loss mitigation department and the submission of the necessary papers, the lender will request details regarding the property, the borrower, and the proposed transaction. In order to demonstrate your competence as a professional, answer all of the questions to the best of your ability if the other person attempts to push your resistance. Persevere, and make sure you ask and answer plenty of questions; that way, they will be more willing to assist you and show you the ropes.
What the broker wants to know first and foremost is the property's value. Typically, a real estate agent or an appraiser will be hired by the bank to assess the property. In the industry, this is known as a "BPO" (broker pricing opinion). When refining your short sale talks, the BPO is a major obstacle to overcome. To help you make a profit on your short sale, the next article will teach you all about the BPO and how to negotiate a lower price.
Oh my goodness!
The Definitive Guide to Negotiating a Short Sale and Realising Massive Foreclosure Profits
The sentence is paraphrased as: "The author, Richard Odessey, is credited with this article."
The save date was 2007-07-25 at 12:30:06.
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Real estate investors stand to gain substantially from purchasing foreclosed properties. Nevertheless, a large portion of these homeowners are heavily indebted. They owe a lot of money and have no equity. Actually, a lot of people have more debt than their property is worth!
Since there is no clear method to make money from these ventures, most investors will pass. But if you negotiate a "Short Sale" with the lender or bank, you can "create" equity on your own.

A short sale is...
As a real estate investor, your objective in a short sale is to get the bank to accept a lower sale price than what is owed as full payment. The idea is simple, really: just purchase the foreclosed property from the bank at a steep discount, fix it up, and then sell it for a profit!
The Mortgage Holder Short Sale Negotiation Process
You will be prepared to deal with the bank's loss mitigation department once you have obtained a contract from the homeowner and all of your paperwork is in order. Successful short sales require coordination with the bank's loss mitigation division. Even though short sales are seen by most lenders as an unfortunate reality of the lending industry, it doesn't imply the bank will automatically comply with your requests.
Grasp the Viewpoint of the Bank
The bank's loss mitigation department is extremely busy, if not completely overwhelmed, due to the 52-year high in foreclosures. Make the most of a bad situation by convincing them of the merits of your short sale.
Lenders benefit from short sales contracts because they allow them to get rid of unproductive property and avoid foreclosure costs. The following are examples of such expenditures: marketing, repairs, bankruptcy, and court fees. Plus, that's on top of the $300,000 to $800,000 (or even more!) that most lenders keep in reserve. This reserve is mandated by federal rules and is typically several times more than the bad debt's actual value.
It is imperative that you, the investor, remember these advantages. Ultimately, it is your responsibility to persuade the lender that minimising their losses is the optimal course of action.
Improving your bargaining abilities is a must. To aid you, I have outlined three steps.
First Things First: Gather Your Documents
Prior to submitting your offer for the short sale, you must gather the necessary documents that is required by all lenders. Second, there is often a separate short sale package (set of paperwork) that larger institutional lenders require.
Bring all of the necessary paperwork to the meeting with the homeowner so you can get their signature on it. Please ensure that the homeowner completes and signs:Disclosure Authorisation (the homeowner's consent for the bank to contact you)Agreement to Purchase and Sale Letter of Hardship (explaining why homeowner is unable to pay mortgage)Detailed accounting report (including all assets, liabilities, income, and expenditures)Net sheet or estimated HUD1 (which shows the bank what they will receive)

Ask the lender if there is a specific package they are looking for as a second step. A simple phone call to the lender requesting a fax of the package should do the trick. Call the homeowner and collect their lender information; then you may gather the necessary paperwork before visiting the residence.
Second Step: Communicating with the Loss Mitigation Section:
Getting your call directed to the correct individual at the bank is one of the initial hurdles you'll encounter. When you phone certain banks and enter the homeowner's account number, the call is automatically forwarded to the right department.
Find the Loss Mitigation Department by calling around if the bank does not have such a system. Because this division goes by different names at different banks, you can find yourself getting passed around from one branch to another. You could also want to consider "loan modification" or "foreclosures department" as possible alternative names.
When you finally get to the correct person, be sure to introduce yourself and act patiently and politely. This individual has the power to seal or derail your agreement. Having a script or outline of the talk at your fingertips might be quite beneficial.
Be sure to address the following when you chat with them:Come on, introduce yourself.You must identify yourself as the homeowner's agent and provide the account number.Get the fax number by enquiring.Notify them that you are faxing a "authorisation to release information" in order to facilitate communication with the loss mitigator.Keep talking on the phone while you send this data by fax.Make it clear that you're hoping for a quick sale.

Talks start as soon as the necessary documents are in hand.
Third, start negotiating.
The way each bank handles short sales reflects its unique character. Some companies instruct their staff to initially display reluctance. Reasons for this include the fact that many investors who call them want to know how to make a short sale yet have no idea what they're doing! On average, a loss mitigator's desk will include 80–300 files. They are too busy to teach you, plain and simple. Make it clear that you're not requiring their help.
It has been suggested that new investors should not announce their intention to invest in a property. The best course of action, though, is to be forthright and declare that you are purchasing the house as an investor.
Both sides can better understand their responsibilities and the areas that require negotiation when communication is clear and unambiguous.
The following should be highlighted while conversing with a loss mitigator:
First of all, you have experience and expertise as an investor. Make it clear that you aren't trying to steal their property, even though you do want to earn a profit.
2. You recognise their busy schedule and value the time they are dedicating to negotiating with you. Determine what can be done to alleviate their burden.
3. Keep in mind the items that will sell. The bank's goal is to sell off unwanted property without suffering a significant loss, whereas the homeowner's goal is to avoid bankruptcy. Yes, you are attempting to earn a profit, but you aren't trying to take advantage of them. It's clear that you're attempting to capitalise on your strengths by applying your expertise.
4. A short-sale benefits all parties involved!
Following your conversation with the loss mitigation department and the submission of the necessary papers, the lender will request details regarding the property, the borrower, and the proposed transaction. In order to demonstrate your competence as a professional, answer all of the questions to the best of your ability if the other person attempts to push your resistance. Persevere, and make sure you ask and answer plenty of questions; that way, they will be more willing to assist you and show you the ropes.
What the broker wants to know first and foremost is the property's value. Typically, a real estate agent or an appraiser will be hired by the bank to assess the property. In the industry, this is known as a "BPO" (broker pricing opinion). When refining your short sale talks, the BPO is a major obstacle to overcome. To help you make a profit on your short sale, the next article will teach you all about the BPO and how to negotiate a lower price.
Oh my goodness!

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