My Short Sale System Draw-Ring

[Ryan Ellis]

My Drawing of my outsourcing of short sale transactions

I know I didn't invent this stuff, but I wanted to organize my process. Here's how it works.

I train Realtors / Agents to bring me their potential short sale listings. I forward the deals to my outsourced loss mitigation partner.

An outsourced negotiator (The circle with an 'N' in it on my drawing) will meet with the bank's BPO agent to influence.

I perform a double close when the short sale is approved by the bank and sell the house to an end buyer. The funds for the first close are provided by hard money / transactional funding.

I would like my attorney to oversee both closings and make sure I get my check. The Realtor gets paid their commission from the first closing.

I know I left out some things like closing costs coming out of the transactions but I wanted to keep things clean.

1. Do you think I should find a local appraiser in the area to meet the BPO agents?

2. I'm looking for a good loss mitigation negotiator ... I saw a post mentioning Scott Hubbard, James Ward, and Steve Londeau. I have no problem doing my first deal as a JV partner. Does anyone have suggestions, and are there any takers?

3. I have been looking at some transactional lending services such as: Best Transaction Funding (Don't like the raining money on their webpage though), Jed3, etc. Does anyone have someone they have worked with and liked?

4. If anyone has a good buyer's list and would like to get a finder's fee for providing end buyers let me know!

-Ryan "The Closer" Ellis

[Scott Hubbard]

Originally posted by Matt Mathews:

I'm not sure about Your State Laws, but I do know that several new Federal laws are now in effect that pertain to; BPO's, Appraisers & Title Co/double closes, all of which you mention here.

I would be really interested in where there are new federal laws regarding the influencing of BPO's, Appraisers & Title Co/ Double Closes. I am curious because I am involved in all of these in one capacity or another along with my attorney and various title companies (which are basically attorneys). I closed a double close yesterday, so please point me in the right direction.

Presenting information to an agent or appraiser will never be illegal. Using the term influence should be substituted with assist because you are helping the agent make a better decision. I believe even Matt would agree to that point. Fact is, NAR says a BPO should take 3 to 4 hours. Most agents will spend less than two. So helping them out by providing information to help them make a more informed report is just being helpful.


I had a BPO done on two houses of the same floorplan in the same subdidivsion in the same condition. Of course, the BPOs were done by two different agents (from the same broker) with a 7% difference in value. I reported this to their designated broker and he told me that is why they call it an "broker's price OPINION".

Or how about the time I met an appraiser at a property that was being short saled and it came back at a value of $155K and it eventually sold at $119K.

As an interested party, you have a right to protect that interest especially when Agents and appraisers make the mistakes I have seen them make. It is not illegal!

Originally posted by Matt Mathews:

Most Title Co's. are shying away from double closings (at least-here in Ca.)

This is not necessarily true. Most title companies are shying away from sameday double closes but there are still that are allowing sameday or next day double closings as long as the end-buyer is all cash. The issue with double closing is not necessarily with the title company, but is with either the A to B lender or with the B toC lender.

I agree with the spirit of Matt's message and that double closings are much harder to accomplish these days but they are not illegal.

Originally posted by Matt Mathews:

Loss Mitigation/negotiator's etc must be bonded and registered with the State Attorney Generals office. Please do yourself a favor and read up on all these laws.

Again, if your going to make a statement like this please back up your statement with support. This is simply not true. In California, as a third-party, you need to be an attorney or licensed agent to handle negotiations. If you are the buyer and are not charging a fee, you can negotiate a short sale.

In most states, there are no laws that state you need to be licensed as a third-party negotiator. So, the only accurate statement above is to check your state's laws.

Originally posted by Matt Mathews:

No one can be present (who may try to influence me), while I am evaluating that property. If so found, I can be fined and loose my license. Same goes for appraisers.

Again NOT True. I am very familiar with the MLS in many states including California. There are no laws that someone cannot be present while you perform a BPO. Secondly, the point of a BPO agent or an appriaser being there is to evaluate the the following::

•Square footage of the home
•Size of the lot
•Year it was built
•Materials used for the exterior and foundation of the home
•Improvements made to the home (including materials used)
•Comparison to three similar properties in the area
•Local real estate market evaluation
• Major structural damage or repair findings
•Evaluation of the neighborhood

Are you not going to take into consideration an independant licenced home inspection report? If not, how are you going to evaluate things like the roof, slab, HVAC, etc?

Are you NOT going to speak to another agent to get a verbal report on the condition of the property?

What about a seller's disclosure statement as to the condition of the property?

Matt, you are not going to lose your license if you are trying to the best job possible and take into consideration all information including the stuff mentioned above. Your being asked to ascertain market value and unless your prepared to crawl on the roof or in an attic or do not consider the condition of the property relevant, I suggest you rethink your choice of profession.

To other investors, if you present information to either an appraiser or an agent, that information should be relevant and provided by a licensed or bonded third-party. Chances are, if you do, that information will be useful for the agent or appraiser.

Also, if you have a BPO or appriasal done and there is no mention of property condition and you provide photos, a home inspection report, and a repair estimate, you can pick apart that report quite easily. I actually like a BPO where there is no mention of of adverse conditions or damages. That way you can make the provider look awful foolish.

Although it may seem I am picking on Matt, what should be taken from this thread is not that influencing BPOs are okay, is that the reason for them is to provide the lender market value. As long as the lender has market value and you are able to resell that property a later time for profit, then that entire process helps protect us as investors. If you go meddling and try to deface the property, provide false or inaccurate information, or coerce a fiduciary (agent or appraiser), then you are indeed breaking the law. Agents and appraiser do have a license they want to protect, so be prepared, professional, and provide independant and verifable information whenever possible. If you do, I gaurantee you will be successful more time than not.