1st time wholesaler

[Jana Gruttner]

I am just in the beginning talks with a motivated seller. He is 2 years behind on his mortgage. He has not been issued a foreclosure notice. From what he told me, the bank is willing to do a short sale and he would like me to talk with them. What can I expect when I talk with a bank directly? Is it smart to use the word wholesaler or investor? I have worked with sellers on lease options before, but this would be my first wholesale. I have no contracts signed with the seller, I am just gathering all of the information. I realize I have no numbers, so I am not sure this is a good deal for a cash buyer, but would love some advice on what to expect when talking directly with a bank.

Thank you!

[Henry M.]

Originally posted by @Jana Gruttner:

I am just in the beginning talks with a motivated seller. He is 2 years behind on his mortgage. He has not been issued a foreclosure notice. From what he told me, the bank is willing to do a short sale and he would like me to talk with them. What can I expect when I talk with a bank directly? Is it smart to use the word wholesaler or investor? I have worked with sellers on lease options before, but this would be my first wholesale. I have no contracts signed with the seller, I am just gathering all of the information. I realize I have no numbers, so I am not sure this is a good deal for a cash buyer, but would love some advice on what to expect when talking directly with a bank.

Thank you!

Jana,

First off, congratulations in moving forward and even speaking to a seller, period. I hope you build confidence with each day that passes.

Shortsale (assumption you've done your due diligence about the home, area, and numbers)... If you are moving forward with a shortsale, there is no need to tell them anything other than you are a buyer.

Now assuming you are successful with providing the shortsale application, etc... Not to mention locking up the property with a sales contract with the seller. Regardless, if moot with the bank, you need to protect yourself from outsiders zeroing in on the deal once you start work or the owner having other ideas.

The bank ultimately will have the typical process when it comes to shortsale or application (qualifying to be unqualified) which can range on average three to six months and sometimes shorter or longer.

You will have to retrieve all info from seller and as much paperwork as possible after you have signed a contract and most importantly, a Authorization to Release Information (which will allow you to dialogue with the bank).

The bank will retrieve a Broker Price Opinion (BPO) of the home and in essence see if in fact is upside down to even do a shortsale. This is done with additional consideration of what the client actually owes on the property.

That BPO is powerful and will dictate whether you can even make a profit. Again assuming you are using an After Repair Value (ARV). You may have to use a private lender or transactional funding to pull this off. If there is a large spread, you can even use a Hard Money Lender (HML) to close the deal, then resale to an exit buyer who is ready to close with cash. Maybe even partner up via Joint Venture.

It truly depends on the home, location, and the numbers to see if in fact it is even worth it. Not to mention the ability to find a qualified buyer (investor/lender/retail).

I don't know the Lease Option (LO) laws in Wisconsin, but it will be difficult to do this with a shortsale. Once or If, a shortsale is approved, you will need to close quickly. Just in case it was a thought.

As for talking with the bank, you will probably be talking to dozens of reps regarding this account. Usually there is an account manager specifically for this client, however I have found I usually end up speaking to multiple parties regarding the account.

This is an time intensive and consuming aspect of real estate but if successful can produce substantial profits. On the other hand, they could run you through the ringer only to renege of the deal and proceed with foreclosure, listing for what is owed, or other.

Lastly, it also depends on who the bank is... there are just so many tangibles and intangibles to even give a specific answer. Especially, without any numbers or general info.

Either way, I hope this helps.

Just my two pesos.

Big Henry