Hard Money Loans

The first word that comes into the mind of homeowners when they are falling behind on their mortgage payments is “foreclosure”. What these homeowners don’t know is that there is another aspect that they can consider with their mortgage company when they are no longer able to pay their account current for whatever reason. This alternative is called a “short sale”. Many individuals are not aware of this alternative because there are many lenders who do not accept this option. Some lenders feel that they are loosing financially and would gain a better result going through the foreclosure process.

A short sale is an action where the lender who holds the mortgage accepts funds that are less than the payoff amount. Before a person can determine if this is an option, they should perform some research by experts who are familiar with the process of short sales. Both parties involved should speak with a lawyer to make sure all revenues and bases are covered throughout this process.

The short sale process involves both the customers who currently have the loan and the customers who are interested in obtaining a short sale. The current lenders usually require the borrowers to write a letter that will give the lenders permission to discuss the account with the appropriate parties such as: real estate agents, lawyers, closing attorney and any interested buyers. read more…

This article is going to presume you know the basics of how to complete a real estate short sale. I’ve conducted several real estate short sales and the one document that keeps proving its weight in gold is the “contractor estimate.” This is the written repair estimate you get from a licensed contractor. You need to meet with the contractor prior to the BPO and have them give you a line by line item of all the repairs needed on the house.

I always tell my contractor to give me a liberal estimate. I don’t want it to be unrealistically high, but I want them to give me a number that is on the higher side of the estimate. The reason I do this is so that I can present it to the broker conducting the BPO in hopes that they pass it along to the lender (which they usually do). This helps me with my negotiations as the bank can see line by line which items need repair.

Typically, I let my contractor know that I am not wanting them to provide me an estimate for a potential job. I explain that I use it as a negotiating tool. As such, I give them some money for their time since usually the bids are free. In some cases, I actually do end up buying the house (as opposed to flipping it) and I go back to that contractor to do the repair work. Of course, when it comes to actually paying for the repair, I negotiate that down as much as possible ;0) read more…

Here are the basic steps to walk you through a real estate short sale. In case you’re new, a real estate short sale occurs when you attempt to negotiate a discount on the mortgage amount of a house you are trying to buy. Usually the property will be in foreclosure and will have no equity. Many times the mortgage amount will be higher than the property is worth, so you negotiate with the bank to accept less than the full mortgage amount.

When working with the seller’s bank, you’ll find that if any step or component of the real estate short sale is missing, your deal can die in no time. Loss mitigation reps that work for the bank often have 300+ real estate short sale files on their desks, so if you are missing anything your file goes right to the bottom of the stack. This is a list of the minimum you must do. Certain banks and certain situations will likely require other steps.

1) Get a signed ‘authorization to release information’ from the seller and their spouse (even if the spouse supposedly isn’t on the deed or mortgage). Submit the authorization to the bank ASAP since it might take them 48 hours before they log it in their system (no exaggeration).

2) Get a signed sales contract and take unflattering pictures of the house. Get copies of all proof of hardship (late bills, hardship letter, etc).

3) Put together your real estate short sale package to submit to the bank. I will go into detail in a future article about what I include in my package.

4) Find out from the bank’s loss mitigation/foreclosure department what fax number or email address or physical address to send the package to. Sometimes when you talk to different people at the bank they will give you different fax numbers that you’re supposed to fax your package to. Fax every number you have, because someone will lose your package, guaranteed. Better to have too many of your packages floating around than too few.

5) The bank will likely order an appraisal or BPO (broker’s price opinion) to estimate the value of the property. Meet the appraiser/realtor and help them see why the house is worthless.

6) Bank accepts or rejects your offer. If they counter, you counter, they counter, and so on until you agree on a price.

7) Set a closing date and collect your heavily discounted property. read more…