About Short Sales

I speak with real estate investors nearly every day, and they always ask me about marketing. Where do you find the good deals? Do you find yourself asking that question, too? They know it might be a good idea to switch strategies when their existing ones don’t work. They get frustrated when their cash flow isn’t steady, so it’s no wonder they’re looking for a better way to find short sale leads.

That’s a great question, and I can answer it in a single word: referrals.

I have coaching students all across the United States who have a jam-packed pipeline of pre-foreclosure and short sale leads, and they spend absolutely no money on marketing. How? They have solid sources in their local markets who feed them free leads to these properties on a regular basis.

Before you go referral-hunting, you need to initiate a couple of referral-friendly programs in your business. The first task is to set up a referral fee structure for professionals who are willing to send you leads. Fees can range from $200 to $2,000, and this extra incentive from a done deal is a very motivating and very simple policy for you to begin. The second task is to develop a Gift Referral Incentive Program (GRIP) for private individuals who take the time to talk to a homeowner in trouble about working with you.

Now that you have the carrot, let’s look at who might be in a position to grab the stick. The only cost of using this method of marketing is your time in getting to know these people.

Attorneys: What you’re looking for is an attorney who deals with financially distressed people on a regular basis. The strongest potential lies with bankruptcy and divorce attorneys, who can and do accept referral fees. Divorce attorneys may have clients who are each demanding that the other pay the mortgage, so nobody does and the property goes into foreclosure. Bankruptcy attorneys frequently represent homeowners in trouble. A good bankruptcy attorney knows that, if a client files for bankruptcy protection, the client should still sell the property to eliminate the foreclosure from their credit report after the bankruptcy has been discharged. Don’t count out other attorneys who don’t specialize, but who do have clients like these. Get to know them too, and ask for their help.

Mortgage Brokers: Since so many mortgage brokers have put people into houses that they couldn’t afford, they often feel some sense of obligation to help distressed homeowners who were once their clients. Refinancing doesn’t work when the homeowner is over-leveraged as so many are today. Consider bringing up the possibility of building a direct marketing campaign to promote both of you. For example, the mortgage broker can create a direct mailing campaign to generate possible leads for refinancing; however, the broker can include in his marketing that, for those people precluded from refinancing, there is another option – you. Conversely, you as the investor can do the same thing, but with a twist: you can market the option of either selling the house or trying to refinance. Since 90 percent of attempts to refinance end in failure, the lead will come back to you, the investor. Make sure that the mortgage broker pays for the direct mail campaign. When your short sale deal closes, pay the mortgage broker that referral fee.

Title Companies: Mortgage brokers who are attempting to refinance a person facing foreclosure always work with a title company. If a title company is aware of the work that you do, and you send them business, they will send you leads for those refinance deals that failed. Title companies are also staffed with people who are in the real estate business. They hear things going on throughout the area and the industry. If they are aware that you want those leads, and that you also pay referral fees, they will send you those leads when they run across them.

Remodeling Specialists: People in the home repair business deal with real estate professionals all the time. Because these contractors also have an unstable cash flow, they might jump at the idea of getting a referral fee just for paying attention to conversations about homeowners in pre-foreclosure. Mention the phrase “up to $2,000,” get out your elevator speech, and get ready to hear all about troubled homeowners in your neighborhood.

Other Short Sale Investors: We were doing short sales while most of the real estate investors around us were doing rehabbing. It didn’t take long to figure out that they had no idea how to help homeowners who couldn’t sell their house outright because they owed more than the house was worth. Once we explained our referral program to them and offered them anywhere from $1,000 to $2,000, the leads began to come in. It also became a good opportunity to get to know other investors and their businesses.

Sellers, Friends, and Family: The homeowner will be feeling pretty good about how you helped them when the sale of their home closes. While you can, take that opportunity to talk to them about who else they might know in their situation. Emphasize the benefits of referring their friends to you with your GRIP flyer, and leave them with a business card or two to pass along just in case they think of anyone later who might need your help. Hand those out to your family and friends too. They’ll be more likely to remember you when they talk to a homeowner in financial trouble.

Finding new short sale leads can be as simple as getting to know the people around you. Good luck with your networking!

Want to find out more about finding short sale leads? Visit Josh Cantwell’s site on how to choose the best marketing methods for your needs.

Dealing with short sales

Short sales are becoming much more frequent in the United States, mainly because they are an alternative to foreclosure. Homeowners who are facing foreclosure are looking for ways to keep from damaging their credit, and a short sale does just that. Quite basically, a short sale is when the lender agrees to accept an amount less than what is owed on the property loan.

Whenever you are considering a short sale call the lender that is holding your mortgage loan. You need to specify that you need to speak only to someone who handles the short sales for the company. Be prepared to be put on hold, transferred, and even disconnected a ton of times before you get to the right person.

The second step is to send in a written letter of authorization. This will give the lending company written permission to disclose any pertinent information to the parties that request it. You should include your name, address, the date, and account number. You should also have the document notarized, just to be on the safe side. Make a copy for yourself.

You will need to provide a written hardship letter. The best tip that you can get for writing this letter is to be as pitiful as possible, within reason of course. Do not simply say that you lost your job and cannot pay the full amount. You need to include other hardships that you have suffered as well as the loan problems. If you have children, you add them in somewhere as well. You need to play the sympathy card here.

In many situations, you cannot sell the home for the amount that is owed. The market rises and falls so quickly, but when it falls, it stays down for awhile. This is usually the main reason for a short sale. It is simply impossible for you to pay the amount that is still owed on the loan because the house will not sell for that much. In this case, you can obtain a comparative market analysis from the real estate agent. If you provide this document to the lender with any other documentation that they need, you are more likely to get the short sale approved.

For a FREE Webinar Training on Short Sales from Phil Pusjeovsky click here:

http://www.shortsaleteaching.com/training/webinarreplayevent.html

While the rest of the economy is in shambles, and record numbers of foreclosures make headlines, real estate investors are earning thousands of dollars by buying and selling homes. It seems that real estate investors know a thing or two about systems, strategies, and styles of investing that the average homeowner does not. If you are a budding real estate investor and you’re looking to invest in homes but don’t know how, here are some of the basic strategies that investors are using.

SHORT SALE: A short sale is when you purchase a home because the bank is willing to sell it for less than what is owed on it. This happens a lot because banks know that they cannot collect their entire lost amount if they have to bring a house all the way through the foreclosure process. So you can buy a home for less than what is owed, and re-sell it someone else for a profit. For more info on short sales go to: Www.investingwiththestars.net/ben/htm. Ben Pargman, Attorney has a great system to learn short sales! For more information on short sales go to: www.investingwiththestars.net/ben.htm

REO: REO stands for “real estate owned” and this is when the bank has taken ownership of the property. When you buy the property, you are not buying it from the homeowner but rather from the bank. Many times, the banks will often let homes go because it costs them thousands of dollars to re-list and sell homes and they don’t want the non-revenue-generating real estate on their books.

SUBJECT TO: When you purchase a home, it is one of the best ways to buy a house! When you buy a home “subject to” the existing financing, you get the deed to the home but the original owner keeps the mortgage in their name. You take over payments of the mortgage and ultimately sell the deed to someone else. For more information on Subject-to investing go to: www.investingwiththestars.net/banks.htm. Mike Watson has a program to get you started in subject-to investing!

Nancy Geils

Teacher/Financial Coach