Thursday, October 7, 2010

Revival Story

I'm not 100% sure how I continue to get Short Sales approved, but I definitely have a "Magic Touch"...

This was a good week for me.  We closed 2 Short Sales, both of which I was able to get an "admin/processing" fee approved which means a bonus for me.  On top of that I was able to salvage a couple of Short Sales that were completely DEAD.

Now, I did have a Buyer walk on an approved Short Sale... and they were my Buyer.  But I have until January to find another Buyer and get the deal closed.  I think I can make that happen and will keep you posted! Just sitting on the deal with an approval in my hand as of now.

The 2 dead deals: both had BPO's come back that were significantly HIGHER than the offers and higher that the market value.  This was in part due to bad agents and partly due to us having the listing price too high.  One thing I have learned about BPOs is that they tend to come in near the listing price - no matter what.  So on both deals I had the Listing Agent keep the listing under contract, but drop the listing price to closer to the offer about a week or two prior to the time that the BPO would be done.  There's a lot of "timing finesse" in Short Sales if you want to be good at them.

Both of the new BPO's came in find and I have verbal approval on both deals.  One of the deals has died twice before.  The first time they were looking for tax returns that the Owner hadn't filed.  He had to go back and file taxes from 2007 all the way through 2009 - in the meantime the bank closed the file after verbally approving our offer and we had to start over.  The second time, same offer: the BPO came in 20k higher than what our offer was and they countered again... so now we were asking the Buyers to come up an additional 20k plus the original 5k they had agreed to.  Not going to happen.  I requested a new BPO and used our timing module and got verbal approval on the 2nd price we were at - this is great news.

The other deal I had a horrible BPO agent who was trying to get the value as high as possible... yes, he told me that and I almost pooped a brick.  Had to wait 60 days for that BPO to expire before ordering a new one.  Same timing trick, different deal.  Verbal approval and working on getting the foreclosure date pushed out so we can get it closed.  It is set to foreclose in 1 week, but I don't usually have a problem getting them pushed out if I have a legitimate deal in the works.

Busy busy busy for this guy! I'll try to keep up better with this blog.  Couple new Short Sales listed this week in the Longmont area.

-JD White

Wednesday, September 22, 2010

Another Day... Another Short Sale APPROVED!

I just got another Short Sale approved, but this one was more of a waiting and bugging game than anything else.  Single mortgage that I had been working for quite a while.  We had an offer that walked on us and then the mortgage switched from one company to another. They told me 14 business days for a response once it was submitted - try more like 45! But the Buyer hung on and now we have a whole 2+ weeks to get the loan done and deal closed!

The lesson here is that it happens to be our Buyer.  So they were already set up with a Lender that I trust and I know can get things done in a jam.  Not to mention they have some of the lowest origination and costs around! - they are nation-wide so that opens up the window for a lot of people.  They had already been working on the loan ahead of time and we will get it knocked out.

On a not so easy note: I also had a Short Sale rejected.  The main reason was a BAD BROKER PRICE OPINION (BPO).  The guy called me after he did it and informed me that he "would get it in as high as possible so that we would be okay".  I think he thought that he was doing an appraisal or something... but I'm not totally sure what he was thinking! That gave the bank the wrong idea about the property and the price.  And this was a 2nd BPO as our earlier one had expired due to missing tax returns.  Our Owner actually had to go back to 2007 and complete all of the tax returns through current before we could start over on the entire transaction.  We had it conditionally approved as well and now that bad BPO gave them the idea that it was actually worth 20k more (On a sub $100,000 deal)! I got the okay from the bank today and they ordered a new BPO.

A big part of the game is keeping deals alive - don't EVER give up on a deal until the day it forecloses. There's a difference between being rude to banks and demanding that they take the deal versus thinking outside of the box and working WITH the bank to get the deal done.  Don't take NO for an answer, but don't take it personally when they do say "No".  It's not dead yet - spend some time thinking and using your resources.

I hope this helps!

-JD WHITE, The Edge Realty
President, Managing Broker

Tuesday, September 14, 2010

Latest Deal - APPROVED

Here's an interesting deal that doesn't happen a lot.

I just got a short sale approved that has a 1st mortgage and a 2nd mortgage on it.  The house has been listed for several months and I have been dropping the price steadily to get an offer.  I finally got one and was able to start the process.

Here's the amounts that were owed:
1st Mortgage = $137,000 (approx.)
2nd Mortgage = $55,000 (approx.)

It is listed at $129,000 and I cannot disclose the offer amount. You can see just from the numbers that the 2nd is the one taking the big hit on this deal.

I got the 1st approved fairly painlessly because the Broker Price Opinion (BPO) came in where we needed it to.

The 2nd was rather difficult.  I had them getting $5,000 out of the deal which is pretty high for a 2nd to get.  If the property goes into foreclosure, the 2nd gets a big fat -0-! The 1st was okay with them getting $5,000 and had put that in the approval letter that they sent me. Problem: 2nd COUNTERED AT $15,000!! Ugh!

Here's where a lot of negotiators throw in the towel and just call it a "dead" deal. That certainly wouldn't help my 95% + success rate, so here's how I took care of it.

1. I spoke with the 1st to see where their stance was.  They were not budging on that amount.  They informed me that the 2nd will see -0- when it forecloses in October. Lovely, huh!? They also informed me that the Seller would have to come up with the difference.  So my wheels got spinning and I rephrased what they said and asked them if the Buyer came up with the amount, could we get a new approval with the purchase price reflecting that, etc? They said "fine."

2. I called the 2nd and told them that I "thought" I could get them $10,000 if they could get me an approval for that amount.  They actually said yes and sent me over a letter agreeing to release the lien for $10,000.

3. I called the Buyers' Agent and checked if they could come up $5,000 plus dollars (the plus covers the slight change in commissions) and they were totally on-board as I had explained everything in full detail throughout the process.  If the Buyers Agent knows what's going on at all times, it really makes it easier to get changes made if needed.

4.  I went back to the first and asked them for a new approval with the purchase price being raised, the net being the same, and any information pertaining to the 2nd being removed.  They got it to me right away.

Now we are working on getting it closed! I hope that helps some of you that are having trouble around a Short Sale with 2 mortgages - they sure can be sticky!

- JD White
"The Short Sale Guru"

Tuesday, August 31, 2010

What is a "Short Sale"??

Welcome to my new blog!

What is a Short Sale? The easiest definition would be that a Short Sale is the sale of a property where any, and/or all, lienholders release their lien(s) for less than they are owed.

For example, Joe and Susie own a house in Denver, Colorado.  They bought the house in 2007 with an 80/20 loan.  The purchase price was $100,000 - so the 1st mortgage would be $80,000 and the 2nd mortgage $20,000.  The house now appraises at $75,000 and Joe and Susie both have lost their jobs within the last year.  You can see the dilemma!

Through a Short Sale, a Buyer can be found at say $75,000 (with some innovative listing approaches!).  We would then present the offer along with a LOT of other documentation to both mortgage holders.  The 2nd would be offered around 10% of what they are owed: $2,000 and the 1st would get whatever is left after commissions, closing fees, tax escrows, etc are paid... probably around $65,000.  If the banks had their own appraisal done and they came in at $75,000 or LESS - then the deal would make sense to them.  For them to foreclose on the property and then turn-around and sell it for the same price would cost them significantly more time and money.

It's a fairly complicated process, but once you have been through a few as a Realtor, the overall transaction becomes much less-confusing. I have now done deals that have 2 or 3 mortgages, an home owners association with a backlog of fees, and a seller that has files bankruptcy! It doesn't always work out for the better - they say that the industry average for Short Sales being approved is somewhere between 20-30%... I'm hitting about 95%.  But that's also why I'm called a Short Sale GURU! I'm going to try and give away my secrets here and get you all to purchase a book down the road if I ever get it written!

Truth is, I'm in the business of helping people.  That approach has never served me wrong - putting others before myself is something I learned from my Mother.  I hope you enjoy the posts as they keep coming and please don't be afraid to leave me a comment and as for any advise if you need any!

-JD WHITE, The Edge Realty, Inc.
President, Managing Broker