Sat, Nov 21, 2009
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The Ultimate Short-Sale Technique!
| | Tuesday, May 06, 2003 @ 04:00 AM EDT
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Contributed by: Scott Rister
Scott Rister Properties
Read more archived articles about Marketing
To be successful in real estate I always preach to the masses that you have to be significantly better and significantly different than the next person. That "next person"
is called your competition.
I don't want to send out hints of paranoid thoughts that you shouldn't network with other investors. In fact nothing could be farther from the truth. However, other investors including myself still guard some of their secrets on finding truly great deals in order to consistently profit in creative real estate in their local market.
Let me give you an example of exactly what I'm talking about. I travel and speak at various real estate clubs and organizations of which one promoter of a very large club in
fact didn't want me to speak about one particular subject.
The one particular subject is "Probate real estate investing" that is simply the most overlooked and misunderstood areas for creative real estate. I was very puzzled by
that comment from the promoter which was said half jokingly and half seriously.
When I inquired why he wouldn't recommend speaking on such a key secret that only very few successful real estate
investors know about, well his response was quite understandable, "Scott, that is the bread and butter of my personal real estate business here and I don't want to create any
competition for myself."
In one way I can sympathize almost with the real estate investor, but on the flipside I'm committed for EVERYONE that wants to be successful in creative real estate must know about PROBATE!!
Let me get specific...
though with one no-brainer technique that if you key into Probate will make it VERY profitable for you. This has to "Short Sales" within the Probate process!
First off you must know that Probate exists for the benefit of creditors and NOT for the heirs. When someone passes away with a $5,000 Visa bill, the creditor has a right to claim their balance due through each state's regular Probate process.
One of the creditors involved that makes this work for the real estate investor is obviously the mortgage company/lender.
So, let me ask you how the lender feels sometimes about the status of their loan when someone passes away and there isn't
much money in the estate to keep the mortgage current. Let me answer that question for you and state they can be VERY, VERY motivated.
So now we've got a creditor who has a non-performing loan and because of many reasons they are willing to "wheel and deal". That is where the arena of short-sales comes into play that when you're "luckily"(right!), at the right place at the right time can mean a deal with chunks of equity to be had. These are the
types of deals that put you into true financial security.
Now, unless you're totally new into real estate or have been hiding under a rock then you already know that negotiating short-sales is an absolutely must have technique. This simply is getting the bank to accept a significantly lower loan payoff than is currently on the books.
Sometimes there are many steps that need to be followed in order to effectively negotiate a short-sale of an existing mortgage. One of those key steps in negotiating a short-sale
with a lender is the amount of information about the seller that needs to be produced.
Most of the time you'll be needing to gather the following information from the seller:
1) Current employment pay stubs
2) Financial statement of assets
3) Written proof of financial hardship
4) Hardship letter of seller explaining personal situation
5) Any additional bills or such verying financial hardship
6) Etc, Etc.....
Have you put this together yet? If not then let me spell this out for you. Everything I've listed above and more required by the lender is basically not needed when it comes to the seller having been deceased!
In the short-sale process you're seeking to really make the seller in the most unfavorable financial light as possible. The reason being is so that the bank will be first of all motivated to begin with and now when you couple that with the seller having passed away means they are much more attentive to your real estate investor special offer.
You will be able to find properties in the Probate process that there simply isn't any or enough money in the estate to keep the mortgage current. In other words, its going straight to foreclosure and in a hurry.
The Probate short-sale recipe for success then boils down to this: property heading to foreclosure and mortgage that is currently in default or soon heading to. All the cards are out on the table so to speak when presenting your offer in this light. Its now the lender's turn to accept or counter and helps put you in a much stronger negotiating position.
Of course there is a clear/conveyable title issue that has to be worked out, but this is a small hurdle to overcome within the Probate process. In fact its really the type of
"problems" you'll be glad to work through for that deal that has a huge chunk of equity in it.
Now, it will be up to you deciding if you should wholesale it for some quick cash or buy/hold for long-term equity appreciation. As you can see those truly are the types of
difficult choices in your real estate business you need to be making.
Invest in your personal financial future today with my,comprehensive system, "The Probate Profit Machine!". Good
hunting as luck has nothing to do with it.
Note:
Scott Rister is an author and “real world” investor just like yourself. Scott has designed his courses to help investors get their phone ringing and to better manage motivated sellers. To find out more about how his courses can help you click here. If you have a question or comment about this article, please post them below where it says 'Comments'.
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