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How to Negotiate a Successful Short Sale
Anyone who has ever profited from doing a short sale has also without a doubt had one or two rejected at some point. Guess what? It is just the nature of the beast?As with all types of sales; you're playing a numbers game.
There are very few investors who truly know how to successfully negotiate a Short Sale. We find that most investors have the perception that all that is necessary is to submit an offer and wait for the bank to give you an answer. If all goes well the offer will be accepted but in many cases it's not that simple.
That's why a strategic plan is necessary. "What do you mean?" You ask. A strategic plan means making the deal go your way by persuading the lender to agree with your offer.
There are several steps that will ensure your success when negotiating with lenders.
First of all, you must be able to determine if you indeed have a short sale opportunity on your hands. Many investors are under the misconception that every homeowner facing foreclosure is a good short sale candidate. This could not be any further from the truth. One of the most common mistakes made by investors is attempting to fit a square peg into a round hole. Not all deals are good short sale opportunities. You must know the difference between a good and a bad deal. Period! You'll have to analyze the deal and develop an excellent plan of attack if you want to truly master the art of the Short Sale.
Second, you must not take no for an answer. No can never be the final chapter to your negotiation. If the lender says no you must ask yourself why. There must be a reason. Why did they say no? Is there anyone else I can speak with? Was my offer to low? How does the lender determine their bottom dollar? What else can I do? What was the BPO amount? These are just a few of the questions that need to be addressed each time you are met with some resistance from the lender.
We'd like to share an awesome deal that one of our students closed recently. His name is Thomas Stockman.
Thomas got a call off of one of his signs from a gentleman that had two properties in foreclosure. The two properties were on the same street and were bought as rental homes within the last year. Consequently, they were also financed by the same mortgage company. One property had a mortgage balance of approximately $150,000 and was in need of several thousand dollars worth of repairs. The other had a mortgage balance of $156,000 and was currently being rented for $1,100 per month. Both properties had very little equity but the neighborhood had been very active over the last 9 months. After qualifying the two potential deals he decided to attempt short sales.
He contacted the bank and began the process. His offer on the first house was $89,900 and $95,800 on the second house. The bank rejected both and asked for higher offers. After several conversations and some additional documentation to justify his offer, Thomas was able to get both properties for a total of $60,000 below market value. Thomas rehabbed the first property for $3,500 and put it on the market for sale. Since the second property was already occupied by a tenant he decided to keep it. His mortgage is roughly $400 per month (interest only loan/taxes paid at year end) he makes $700 in monthly positive cash flow. Not bad for a beginner (wink).
This would have never happened if Thomas accepted NO from the bank. If he would have not known what pressure points to touch and how to counter without increasing the offer amount we would not be talking about these deals.
This type of outcome is customary when you are equipped with the necessary tools and know how to turn a "No" into a "Yes" just by slightly adjusting your approach. Thomas got two great properties with lots of equity and a constant cash flow, the homeowner avoided TWO foreclosures, and the bank was satisfied.
Remember, the next time you are putting together a short sale offer, be prepared and take control of the deal. Never take NO for an answer. Be proactive not reactive. Don't just submit offers without having a game plan. Do yourself a favor and take advantage of the opportunity to make lots of money in an industry where great deals are hard to come by. We hope that you have learned something and are on your way to much success.
D.C. Fowler, Real Estate Investor/Educator
Mr. Fowler has been a real estate investor for over 15 years specializing in the area of pre-foreclosure/short sale investing. He has bought and sold over 200 homes in Georgia, Florida, Louisiana, and Tennessee using the same short sale techniques that he teaches in his course, Making Money with Short Sales: The Complete Guide to Acquiring Property Pre-Foreclosure. Mr. Fowler currently resides in Atlanta Georgia. He also spends many hours per month teaching his creative real estate investing techniques to other aspiring investors across the country.
Questions To Ask The Landlord Before Renting His Apartment
Apartment hunting is not the easiest thing around. You may find places not suited to your tastes or those which do are not to your budget. Eventually, you may have to settle for something a little less than perfect or if you're lucky, you may just find a home you love. However, before you finalise on the apartment, there are a few questions you need to ask the landlord so that there is no reason for disagreement later on during the lease period. In fact, some of the points mentioned below may also be included in the agreement for your safety so that the landlord doesn't go back on his word. When will the unit be available for occupation? If it's ready to occupy and it's impractical for you to move in immediately, you may have to negotiate with the landlord so that you don't pay for unoccupied time. How much is the rent payable and when is it due every month? How much is the security deposit and is it fully refundable? Is there a penalty fee for late payment of the rent? What are the terms for renewing the lease? Are pets allowed and if not, would it be possible to have pets if you paid a pet deposit? If a pet-deposit policy is in place, is it refundable if there's no damage caused to be found when you move out? What are the conditions if you have to move out before the lease expires? Even if you may think you won't have to move out for a long time, it's better to keep your options safe and negotiate secure terms should you need to move out earlier than the expiry of the lease period. Are any utilities included in your agreement? What are typical bill amounts in different seasons? Are you allowed to share your unit with roommates and what is the policy on subletting the place? Can you paint the walls or make other decorating changes? Are you allowed to run a home business from your apartment? Who will be responsible for property maintenance? Who are your neighbours? How close is the nearest post office, grocery store, bank, restaurant and public transportation? Asking these questions only avoids any cause for disagreement in the future between you and your landlord.
The Secret To Marketing Your FSBO Home For Sale
You're ready to put your home or land (house, townhouse, condo, apartment, farm, ranch, finished lot, raw land, etc.) on the market as a FSBO (for sale by owner). You've priced your property appropriately and gotten it ready to show. How are you going to market it so that it gets exposure to enough potential buyers to actually sell?
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The Person With The Most Money Wins!
More money can mean better:
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Psssssssssst, Want to know a great way to make FAST money in real estate? Listen closely now because this tip is definitely cashable... The sweetest spot for you to hit as a real estate investor is a deal that no one else is bidding on.
Equity is the value of your home minus what you owe on your mortgage. For example, If Joe's home is worth $200,000 and Joe still owes $170,000, then Joe's Equity is $30,000.
Real Estate Development Marketing
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