Calls are coming in and I still have serious questions.

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Calls are coming in and I still have serious questions.

Jeff NA
Involved In Real Estate · Portland, OR · Member since 2008 · 117 posts · 44 votes

After many starts and stops trying to get started in some area of real estate investing, I finally have calls starting to come in from a direct mail campaign. Problems is that I have many serious questions, and while I don't mind telling someone that I don't know, that I can find out and get back to them, I think you can only say that you don't know so many times in a single conversation before you appear to know very little.

So without making this too long, perhaps someone with more experience can lend some advice or answers.

Two biggest questions I have:

#1. What happens if I get through the entire short sale process, the bank approves the price, the seller is on board, and I just don't find a buyer? There's no question that it would be from a lack of marketing effort, as I'm sure I'm going to go far out of my way to get my first deal done so I can move on. Surely this must happen though. If a buyer doesn't materialize, then what? What happens to the seller? How do I protect them?

#2. What happens if the bank doesn't accept proof of funds from a transactional lender? I've heard it happens from time to time, and I do not have a backup plan here.

I am most afraid of convincing a distressed seller that I've come along to help them only to have the entire deal fall apart and them suffer further consequences. Any helps or ideas are most appreciated.

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James Ward
Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
16y

I will be more than happy to answer your questions.

1) If you are marketing a property and you are not getting offers, than you are marketing the property wrong. If you get an Approval for a Short Sale and you can NOT buy and resell for a profit, then you SHOULD get out of the way and let the transaction (Destressed Seller and any Buyer) happen without you. Be prepared to assist anyway you can, and be prepared to have to get out of the way.

2) We submit POF's all the time. You will not run into issues if you get a good POF.

Hope I have answered your questions.

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  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    16y

    How would the lender know the POF letter is from a "transactional lender"? Most of us do lots of different types of lending and in my POF letters I don't say anything about transactional funding. "Transactional" is just a name that someone came up with for a particular type of private money. It is funding. That is all they care about.
    However, you do have to make sure you are disclosing up front that you intend to resell for a profit immediately.

    '

    Originally posted by Jeff Z:
    After many starts and stops trying to get started in some area of real estate investing, I finally have calls starting to come in from a direct mail campaign. Problems is that I have many serious questions, and while I don't mind telling someone that I don't know, that I can find out and get back to them, I think you can only say that you don't know so many times in a single conversation before you appear to know very little.

    So without making this too long, perhaps someone with more experience can lend some advice or answers.

    Two biggest questions I have:

    #1. What happens if I get through the entire short sale process, the bank approves the price, the seller is on board, and I just don't find a buyer? There's no question that it would be from a lack of marketing effort, as I'm sure I'm going to go far out of my way to get my first deal done so I can move on. Surely this must happen though. If a buyer doesn't materialize, then what? What happens to the seller? How do I protect them?

    #2. What happens if the bank doesn't accept proof of funds from a transactional lender? I've heard it happens from time to time, and I do not have a backup plan here.

    I am most afraid of convincing a distressed seller that I've come along to help them only to have the entire deal fall apart and them suffer further consequences. Any helps or ideas are most appreciated.


    1Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    16y

    Oh, and what if you don't find a buyer?

    That is life. You do your best but if you don't find a buyer then you can bet that your short sale deal wasn't that great to begin with so you move on or try to ask for a lower price.
    There isn't much you can do to protect the seller. When they sign with you, they are making a bet that you will get the job done. They won't always win that bet, but if you do win a SS approval from their lender at least they know what the bank will accept and the groundwork is laid for the next person to try.

    Good Luck.

    1Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    16y
    Originally posted by Jeff Z:
    ...

    #1. What happens if I get through the entire short sale process, the bank approves the price, the seller is on board, and I just don't find a buyer? There's no question that it would be from a lack of marketing effort, as I'm sure I'm going to go far out of my way to get my first deal done so I can move on. Surely this must happen though. If a buyer doesn't materialize, then what? What happens to the seller? How do I protect them?

    ...


    Maybe as an investor, you should also be prepared to be a buyer as well...
    2Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    16y

    Hi, Steve has a very good point!

    What if, this isn't the right strategy for you in real estate?

    What if, there were other ways for you to "invest" without being so responsible for messing up someone's life and financial condition?

    What if you could find a buyer before you entered into a SS contract?

    What if you first used an open option with the seller, just between you and the seller, then you found your buyer, then convert that to a SS contract and then do your deal?

    Good luck, Bill

    1Reply
  • Jeff NA
    OP
    Involved In Real Estate · Portland, OR · Member since 2008 · 117 posts · 44 votes
    16y
    Originally posted by Financexaminer:
    What if, there were other ways for you to "invest" without being so responsible for messing up someone's life and financial condition?l

    Like what? Wholesaling? Those prospects don't call, but I'm sitting on a pile of short sale leads right now. So how about I figure out how to make it happen?

    Also I think it's a stretch to suggest that I would "mess up" their financial situation. I have no question who I am here to serve, and after meeting the other parasites at the local REIA, I have no question that at least my intentions are in the right place.

    Of course if you have advice or suggestions on how to learn or grow, I'd appreciate it. If your "advice" is to find something else to do. . .well. . .thanks anyway.

    1Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    16y

    Guess you mistook the comments as the "what ifs" I didn't mean to say you would, but that's what you seemed concerned about and that's very good!

    Doing it like you are, you are assuming risks of doing just that. If a seller get hung up in a contract and yours is accepted, you go to close and you can't perform because you don't have a buyer, what do you do? If the seller loses that deal, what will the lender do, it was on the market, went to SS, failed, then what's next, foreclosure? Maybe the messing around will effect the seller and have consequences.

    I suggested you work them as options until you had things in place to do your deal, with a buyer lined up. You really can't look for a buyer until you have a contract and you don't have one unless the lender agrees, that's a small window to work within. Good luck with your prospective deals....Bill

    1Reply
  • James Ward
    Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
    16y

    I will be more than happy to answer your questions.

    1) If you are marketing a property and you are not getting offers, than you are marketing the property wrong. If you get an Approval for a Short Sale and you can NOT buy and resell for a profit, then you SHOULD get out of the way and let the transaction (Destressed Seller and any Buyer) happen without you. Be prepared to assist anyway you can, and be prepared to have to get out of the way.

    2) We submit POF's all the time. You will not run into issues if you get a good POF.

    Hope I have answered your questions.

    3Reply
  • Jeff NA
    OP
    Involved In Real Estate · Portland, OR · Member since 2008 · 117 posts · 44 votes
    16y
    Originally posted by James Ward:
    If you get an Approval for a Short Sale and you can NOT buy and resell for a profit, then you SHOULD get out of the way and let the transaction (Destressed Seller and any Buyer) happen without you..

    I would have no problem removing myself from a transaction if it meant getting the deal done. I figure I gain experience and knowledge even if I have to wait for the money.

    Many thanks James.

    1Reply
  • Jackie Patterson
    Real Estate Investor · Kalamazoo, MI · Member since 2010 · 681 posts · 241 votes
    16y

    Jeff, If you're getting lots of calls, and "sitting on a pile of short sale leads", you might want to consider partnering up with someone with experience. This will give you an opportunity to gain experience and knowledge while you learn the ropes. When you've got some completed, and feel confident, then you can go on your own. Short sales are not for the faint of heart, and even experienced investors will encounter problems frequently.

    2Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    16y

    Very good! There are two things that will apply in all strategies in real estate.

    1. There will be a problem; and

    2. You don't have a deal until it is closed!

    1Reply
  • Jeff NA
    OP
    Involved In Real Estate · Portland, OR · Member since 2008 · 117 posts · 44 votes
    16y
    Originally posted by Financexaminer:
    Very good! There are two things that will apply in all strategies in real estate.

    1. There will be a problem; and

    2. You don't have a deal until it is closed!

    Look, my mother used to put me to sleep as a little child with a copy of Murphy's Law, so I'm well aware that if there are five possible things that can go wrong, and I take steps to circumvent all five, a sixth way will promptly develop. That's why I'm here.

    Jackie, I appreciate the suggestion and I understand I might be irrational in my opposition to working with others. Thing is, I don't care for most real estate investors. Most of the ones I've met or talked to in person. . .leave much to be desired in terms of ethics. I don't want to go calling and knocking on the door of these people, asking for their help in exchange for my profit. BP is easily the best source of good, reliable info from people who can write in whole sentences, so here I am.

    A sincere thank you to all that responded.

    0Reply
  • Ted Akers
    Centennial, CO · Member since 2009 · 758 posts · 251 votes
    16y

    Jeff, You have some good advice here and you seem to be conscientious. Reality is at times you will not find a buyer with enough spread and you need to step out of the way and let it go A to C, like James said. If no buyer can be found even without profit the seller is in no worse condition then they would have been without your involvement.

    You want to be very thorough in your disclosures to the seller (ie you are an investor looking to make a profit, you cannot guaranty success, etc.). Especially because these are distressed asset/distressed homeowner situations you want very thorough disclosure and the outcome for the homeowner does need to be a primary consideration - which it sounds like you already get. Some POF's out there will get questioned. I have not have any problems with mine.

    1Reply
  • Chris Jefferson
    Rehabber · Glen Allen, VA · Member since 2008 · 45 posts · 28 votes
    16y
    Originally posted by Jackie Patterson:
    Jeff, If you're getting lots of calls, and "sitting on a pile of short sale leads", you might want to consider partnering up with someone with experience. This will give you an opportunity to gain experience and knowledge while you learn the ropes. When you've got some completed, and feel confident, then you can go on your own. Short sales are not for the faint of heart, and even experienced investors will encounter problems frequently.

    Best response in this thread.

    Honestly, your only going to put your self in a tuff spot if you don't do everything correctly. It's always much better (even though you don't prefer) to team with an investor that you can use to see all his paperwork and how the process plays out.

    Now I realize that your going to shoot this idea down, but this would be the most logical way of going about it.

    Here's what you want to hear though...

    Just remove yourself from the deal and be upfront with your seller in the beginning. Like Ted said let it go A to C. When we have to do deals this way we still end up making a small profit. The seller benefits and the buyer also recieves a deal on a property.

    Congrats on a successful direct mail campaign. You just want to avoid issues down the line based off the simple fact that something was done incorrectly or not disclosed.

    Good luck.

    0Reply
  • Dave Stevens
    Investor · Wayne, PA · Member since 2009 · 21 posts · 0 votes
    16y

    This sounds like me when I first started, thinking about all the "what ifs" that could happen and talking myself out of doing anything at all. Then I decided to just deal with them as the come up. Most of the time they don't come up but when they do it's easier to deal with a real problem then a "what if" problem.

    0Reply
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