All Forum Posts by: Brenda Houghton

Hi Sean, if you ever need someone experienced in negotiating short sales, feel free to call me. I can help you out and get the deal to a point where you can close. It isn't possible to wholesale a short sale though, if that's your strategy. But if you are planning to close yourself, we can get the job done. 

We've done door knocking on preforeclosures in the DFW area and actually have had fairly good results. We've never been very consistent and have just gone out somewhat randomly to door knock when we had spare time.  We've gotten about 5 deals door knocking in the last year or so, and several of those turned into more deals. We helped a couple other investors buy short sales which resulted from the door knocking, and we picked up a couple properties ourselves to flip. One of the investor short sales has turned into a partnership where we're doing high dollar flips with that investor - we're on property # 6. Another was a property that had a wrongful foreclosure filed (was not actually a distressed property), and we picked the owner up as a seller. That owner also had a couple of other properties to sell, on which we were the listing agents.  So I consider the yield to be pretty good, considering door knocking is definately low budget marketing. 

Let me know if I can help you out.

Please note: The open house on Sunday, July 24th, has been rescheduled to 1-3 PM.

For more information about the property, click this link:  MLS Listing

The property will require the above mentioned foundation repairs, as well as cosmetic repairs to repair cracks, etc, from the foundation movement. Some flooring will need to be replaced as well, since 14 of the recommended piers are interior piers.

Cash only property, requires foundation repairs estimated at $15k. Neighborhood comps show $153k after repairs. Three bedroom, 2 bath with a pool. Pool may need some work as well. Will be shown during open house hours (1-4 PM) on Saturday and Sunday, July 23 & 24. Call me for details at 817-944-9429. Listed with Keller Williams Southlake, by Brenda Houghton, Realtor. 

Hi Jonathan, 

Actually the bank doesn't care how it gets its money.  If the payoff amount of the mortgage is less than what the house is worth, or what you offer, it doesn't matter if you are paying cash or taking out a loan. It is all money to the bank. However, the owner might be more interested if you have cash.  If they are facing impending foreclosure, cash can typically close in less than a week, thus preventing foreclosure.  A financed transaction may take too long if the foreclosure date is in less than 30 days. The bank may or may not be willing to wait. 

If the mortgage payoff is higher than what the house is worth, you have a different scenario. You would need to do a short sale. Most banks will only negotiate short sales with licensed Realtors or attorneys. Once again, it doesn't matter if you have cash or financing, as long as the house appraises.  However, if you want to flip a short sale, the investor of the shorted mortgage may have holding requirements of 30 to 90 days or more before you can resell.

Also, my experience hasn't necessarily been that pre-foreclosures need minimal renovations. Many of our projects are homes that were preforeclosures.  More often than not, they require full renovations. People facing foreclosure generally did not just run out of money yesterday. These houses often have faced years of neglect, including roofs, foundations, HVAC, plumbing and interiors. So beware!

Hi Larry,

I'm with Keller Williams (Southlake, TX) as well, and a member of KW Luxury Homes International. If you'd like to get into luxury home marketing, I highly recommend enrolling in The Institute for Luxury Home Marketing's course. Grab Gary Keller's books as well - read 'The Millionaire Real Estate Agent', and 'The One Thing'.

All the best!

Hi Ben,

Is your Realtor also representing the seller and negotiating the short sale?  

As Jeff mentioned above, there are many moving parts in this transaction. It is a bankruptcy situation, so the bank has be very careful to proceed in a manner that does not violate bankruptcy laws. Do you know if it is a Chapter 13 or 7? This can make a difference in the timeframe before the house is able to be released from the bankruptcy. Also, the seller being in bankruptcy does not automatically mean the house must be sold as a short sale. It is a short sale only when the value of the property is less than what is owed.

If the FHA appraisal was just ordered about 3 weeks ago, 'in the final stages' means you have about 2 more months to go. In reality, ordering the appraisal signals the very beginning of an FHA short sale, which is a 2 stage process. The lender obtains an appraisal to determine the value of the property, which then will determine the sales price the lender will allow. Also, the short sale lender will review the seller's financial situation and determine whether they are qualified to do a short sale. If the lender determines the seller is qualified, they will issue an Approval to Participate letter (stage 1), which will instruct the seller to have a realtor list the property at the determined price, which is based on the appraised value. All this takes about 30 days from the time of the appraisal.

An FHA short sale must net the bank at least 88% of the appraised value. This means after all real estate commissions and closing fees are taken from the sales price, the lender must get 88% of whatever the appraiser says the property is worth. During the second stage of an FHA short sale, the lender will evaluate the buyer's offer against this bench mark. This also takes at least 30 days, and sometimes much longer if there are any even small errors in the paperwork. If the offer does not meet the 88% mark, the lender can request a variance from HUD to accept a lower amount, and this will take a couple extra weeks.

Using this formula and assuming 1) whomever is negotiating the short sale is extremely familiar with the process to reduce potential time wasting errors, 2) the seller is cooperative and provides all requested financial documentation in a timely manner, and 3) the negotiator at the bank is reasonably competent - you are looking at another 45 - 60 days prior to receiving short sale approval.

Once you receive approval, you may need to wait for the judge or trustee approval to release the property from the bankruptcy so you can close. This is dependent upon what is going on with the bankruptcy.

And one more risk to mention, as did Jeff, Nationstar and other banks put their short sales on auction sites to 'validate' the offer on file. If they get a higher offer, you may have to raise your offer, plus pay a 10% auction fee, to keep your contract on the property.

If I were you, I would find out the value from the appraisal. If it came in significantly higher than your offer, you will spend a lot more time and possibly not see short sale approval. If the appraised value is near your offer amount, it may be worth it for you to stick around for a couple of more months as an approval would be more likely. The appraised value will be on the Approval to Participate letter from HUD. Your realtor needs to ask for a copy of that letter.

You will not be able to speak to the lender personally, as they will only talk to third parties approved by the seller.

The above information is consolidated from my 14 years of short sale negotiating experience.

Brenda Houghton

Hi Matt,

Rents are skyrocketing in Dallas Fort Worth, Texas. Feel free to reach out if you have questions about the market here.

Brenda Houghton, Realtor/Investor

Hi Connie,

Welcome to Bigger Pockets! I'm a Realtor and investor from Dallas Fort Worth. I work for Keller Williams Southlake. If you are considering getting your license, check out your local Keller Williams brokerage. The training KW provides is phenomenal, especially for a new agent. Feel free to reach out to me if you have any questions about becoming an agent.

Brenda Houghton, Realtor

Keller Williams Southlake

Hi Yolanda,

Is the property getting enough exposure? Is it priced correctly?

If you really want to sell it, the answers to these questions need to be 'yes'. If you're working with a Realtor, s/he can re-run the comps, as the market may be a little cooler than it was when you started the project. If it is not on MLS, and/or you don't have access to comps, consider consulting with a Realtor. It may save you money in the end.

If your original project plan was to sell the property, do everything you can toward that goal before you change gears and spend money refinancing.

Good Luck!

Brenda Houghton, Realtor

Keller Williams Southlake, Texas