Short Sales: How are they working?
Developer · Prior Lake, MN · Member since 2010 · 118 posts · 46 votes
I've been hearing a lot about short sales and the trend towards more of them to avoide foreclosing. I also hear that they are a lot of work and the banks frequently don't approve the offer price after working on them for months.
So, my questions are: Are you finding short sales as a viable way to purchase a property and meet the 70% ARV formula? Are you writing on multiple short sales in parallel? How many short sales do you write on to pick one up and how much time do you spend to write on one? Are you picking up short sales from homeowners calling bandit signs or are you marketing direct to them through mail or phone campaigns? Have you had trouble getting the BPO to come in at your price? Have you done anything to influence the BPO in your favor?
Any input would be appreciated. Just trying to get a feel for how well short sales are working as they seem to be trending higher and it seems like banks are going to start being more flexible with them.
-Jaden
Well we did 300-500 Short Sales a month and close 97.44% at 67.95% of the BPO value the thing to really keep in mind is are you looking for 30% off the appraised value? Or are you looking for 30% below the BPO value. The other #1 question I would have for you is what is your exit plan?
So if you know what you are doing you will close 9 out 10. The other deals are going to be to close to the auction to get the deal done or there might only be one Lein Holder that does not want to budge... OR you might have a home owner that is just not motivated to get you all the paperwork on time. That is why I don't work with people that are not motivated under a 10. If you are a 9 I will send you out to someone else to get help.
If you writing offers simply write offers on everything that is in an area that you are interested. Me personally I will write offers on everything. 60-70% of value on properties that are in a area that I would buy and 50% in areas that I don't and 30% in areas I don't know. And 1% in Detroit! Just kidding about Detroit... They are taking a beating right now.
Also I never go out and look at a house until the numbers are in. Well to be honest I don't go then either.
This is sales and sales is numbers write as many as you can
Jaden, Very thorough set of questions. I have a Blog here on BP titled "Should Investors Consider Short Sales" that you may find interesting. It is detailed regarding delinquency numbers and does predict noticeable increases in short sales. I fund them for investors doing flips so will leave the detail responses to the negotiators dealing with them daily. :D
Thanks for the real-time response Ted! I'll check out your blog.
-Jaden
Well we did 300-500 Short Sales a month and close 97.44% at 67.95% of the BPO value the thing to really keep in mind is are you looking for 30% off the appraised value? Or are you looking for 30% below the BPO value. The other #1 question I would have for you is what is your exit plan?
So if you know what you are doing you will close 9 out 10. The other deals are going to be to close to the auction to get the deal done or there might only be one Lein Holder that does not want to budge... OR you might have a home owner that is just not motivated to get you all the paperwork on time. That is why I don't work with people that are not motivated under a 10. If you are a 9 I will send you out to someone else to get help.
If you writing offers simply write offers on everything that is in an area that you are interested. Me personally I will write offers on everything. 60-70% of value on properties that are in a area that I would buy and 50% in areas that I don't and 30% in areas I don't know. And 1% in Detroit! Just kidding about Detroit... They are taking a beating right now.
Also I never go out and look at a house until the numbers are in. Well to be honest I don't go then either.
This is sales and sales is numbers write as many as you can
Rob, who are you selling these deals to? Do you work in Minneapolis at all? It sounds like you've got the system figured out. I would prefer if I could just find a seller that is putting these deals together, so I wouldn't need to learn the system and do the work myself.
-Jaden
I negotiated Short Sales for people accross the nation. And have done well over 10,000 of them. I also worked as a Negotiations Manager for a major lender for a short amount of time. Generally you will see 13% off the BPO Value and the BPO is done my a neutral Broker generally. You will read on here over and over to go out and meet the BPO agent to influance there price. Personally I don't care about there price. I negotiate them differently I show the lender there profits if they take it thru the foreclosure process. That way they understand where I am coming from. So no I don't buy 300-500 a month. Yet I make money on every file.
My theroy is you never get what you deserve you get what you negotiate.
-Jaden
Depends on who you use to do this. Some of them want a percentage of the deal some just want a fee. Some are willing to pay you a fee to let them take your deal. Personally we charged $1,000.00 per file to the lender on the hud. So we do 300-500 per month we make awesome money. Stay away from anyone that charges a up front fee and always ask to talk to pervious clients.