All Forum Posts by: Danielle C.

The idea of this spreading is definitely *not* comforting.

Chris, while I feel your pain, the lawmakers here in Illinois are too busy trying to see what they can do to put themselves in jail rather than pass any laws at all, good or bad :)

Hey all,

Out of curiosity, is this a newer requirement? If so, do you foresee this type of requirement spreading nationally? Obviously, I hope that wouldn't be the case, however with Short Sales, who knows what long term future holds... you've just got to roll with the punches I suppose!

Thanks,
Danielle

Hello Bryan,

I am not in your area and cannot recommend a RE investor friendly attorney. If no one responds with suggestions that are directly local to you, you may want to contact the closest Real Estate Investment club in your area. These are great places to network to build your buyer list, find RE investor friendly attorneys, RE agents and even references to Title Companies.

Best wishes,
Danielle

Thank you kindly Ted! We'll find out soon enough if my efforts pay off ;) Truth be told, all information that I have on Short Sales and really REI in general comes from this site and those (like you) who have been more than willing to answer any questions. So to anyone newer who reads this, get your education for free here at BP!!

Hi James,

What ratio does your company use when a homeowner is paying other debtors?

For example, the homeowner cannot pay their mortgage, however is still making car and credit card payments. Perhaps these amounts equal or are close to their mortgage amount. By looking at their financials, it's clear they cannot pay all three. In this scenario, do you require homeowners to sign promisary note?

I understand in a way, that the lenders are saying pay me over anyone else because your home should be most important. However, if the homeowner loses their car maybe they lose their job if they still have one and then really can't pay. Or if they are out of work and lose their car, then they really aren't getting a new job to catch up. On top of this, perhaps they are paying credit cards because they are then recharding the money to pay for other things, kind of like recycling the money. This is all hypothetical of course.

So where does your company draw the line in amounts being paid to other debtors? Is their a specific ratio used?

Thanks!
Danielle

Hi Eric,

I think you may have misunderstood what I was asking. I was pretty much using a wholesaling term, "farm area", meaning the area that I will mainly locate properties out of. In a sense, you are farming the area for deals. I started out in Wholesaling, so was still thinking in those terms.

30-60-90 late lists refers to lists that you can purchase on people who are late on their mortgage payments. The list encompasses those who are 30 days late, 60 days late and 90 days late. After 90 days, you can generally just go to the courthouse and find these people because a NOD (notice of demand) has been sent to them and it is now a matter of public record.

For me, because I am not buying and holding, the faster the property resells the better. So I want to make offers on homes where the area's average DOM (days on market) is low. Even 120 days is a bit long. I'm really shooting for 100 days or less.

I will retail these properties using an RE Agent. The agent is an important aspect. They take a chunk of profits, so have to be worth every penny by being motivated, agressive and knowledgeable.

Hopefully this clears things up. If you have any other questions, feel free.

Thank you,
Danielle

Hi there,

To answer your questions, in my opinion only....

It sounds like you want to Short Sale your property and take as little loss as possible, which is understandable. Let's look at your options:

If an investor were to make an offer on your property, they are going to obtain as much a discount as possible, because they want to make as much money as possible. I can't see this as a viable option, since you don't want to take more than a 20k hit.

It may be a bit more attractive for an owner occupant to make an offer because the discount they get will be enough to cover estimated repairs (5k), plus obtain a bit of equity (about 15k). This of course is under the assumption that the realtor gave you correct comps and that the prices in your area aren't still falling, in which event may prevent even an owner occupant from bidding. The downside to this is that Short Sale takes several months to complete - at minimum. As well, a Short Sale is never guaranteed to be approved. It may be very hard to find the right buyer who is willing to wait for a *possible* approval. Remember, this is a buyer's market, so they have alot of options right now.

I understand that you need to sell due to medical issues. Is it just not possible to put the money in for repair and list with an agent? Perhaps if you have the cash, but not the time to repair you can offer a credit at closing and just pay out of pocket?

A few brief points...

How much do you trust this realtor? Perhaps get a second opinion. Explain that you need to sell fast and ask what improvements are necessary for that. Also, you may be able to get a contractor to do the work for less than 5k. This is a tough market and *all* professions are hurting.

Not certain how familiar you are with Short Sales, however keep in mind they will impact your credit negatively. Depending on your financial hardship, the fact that you are current on your payments may hurt your chances of successfully completing a Short Sale. This also largely depends on your lender and the negotiator.

Finally, have you considered either straight renting or renting with the option to buy? I know that your property needs work, however there are plenty of credit challenged people with money who want to live in a home. Offer them to complete the work and credit it as a down payment. Just ensure that you request receipts.

This may be the best option to move quick, depending on the rental market in your area and if rent can cover your payments.

No matter what, seek professional advice before you make a decision.

Good luck!
Danielle

With your goal of getting into a larger home, it's good that you won't try the Short Sale route, because any Short Sale - even if you are not behind on payments - will negatively affect your credit.

Regarding what you hear from others, keep the source in mind. Since you have worked to build your credit, you may want to discuss your options with a credit counselor. Right now, even a 750 score isn't top of the line and one false move can send you back where you came from.

I understand that you would need to lower your payments to cover renting the condo. Have you considered perhaps a rent with option? This way you may be able to justify charging an extra so much per month. Also, have you identified what the difference is between your monthly mortgage payment and what the potential for rent is? Perhaps the difference may be small enough to pay out of your own pocket?

Good luck!
Danielle

Hello Scott,

Thank you for the detailed repies!

It makes sense that the commission costs are being passed along to the buyer in distressed sales, so keeping them as low as possible is key.

I do agree that this is a numbers game and I like your method of working with Realtors. My concern as someone just beginning and without high volume at this point, is if they will go for the diminished commission on the A to B side. I hope to have them agree to doing more than just sending the lead to me, such as prescreen the lead according to specific criteria that I provide, explaining and disclosing the entire short sale process... basically working to get the potential client at minimum, firmly interested in working with me. With that said if I locate Realtors who are only interested in just sending a lead, then yes, 1% would be justified, with an offer for them to relist, totalling a possible 7%.

Getting a Realtor to trust that I will be able to close deals is extremely important, so I am also thinking of offering a structure such as 3% on the first deal, 2% on second and 1% for each subsequent lead that closes. This includes the option to relist. Bring them in with the promise of money and keep them through volume. This way they see that I am capable of completing my model and will hopefully feel more comfortable in being agressive with obtaining solid leads.

I agree with Carla, I believe it's important to get the Realtor excited and let's face it, they are doing this for the money, so it's the money that talks. I agree with you also, 9% is high overhead and can be an investor killer. At this point I will have to guage the response that I receive from Realtors as I reach out to them and what seems to interest them most. Nick has mentioned several times, just keep going until you find someone who "gets it" and leave the others behind. So I am hopeful that I will come across those who understand that volume = big payouts as well.

Illinois is a dual agency state. The brokers are able to structure their office in anyway they choose, so buyer, seller, dual, etc. I've read quite a bit for dual agency and even more against it. I believe with this it depends on your level of transparency as an investor, how transparent your contracts (affidavit of understanding) are and how well your Realtor is able to articulate with the seller what it is we are doing. I think for me, much of this is going to depend on the Realtors that I am able to bring aboard and my comfort level with them being able to carry about my business model. I am excited to get going, however want to get as much aligned as possible to reduce errors along the way. I've received some excellent "food for thought" here. Thanks to everyone who contributed!

Danielle

Nick - are you actually asking a newer REI to *not* over complicate things? Seriously, very good advice. It's what I needed to know. As well, yes, Carla is on point... congrats on finding her!

Carla - thank you for the excellent answer! You also answered a question that I didn't ask yet which is what should I expect the agent to do for me. I definitely plan on paying the agent on both sides, I just suppose that I am getting my ducks in row to see how to best structure it. I like Nick's idea of having them as a dual agent, that way they are getting the entire amount the bank pays out.

As well, I will be using my own negotiator, so that hopefully will be a caveat for the agent because it's a lot less to deal with.

Thanks for your answers. They are much appreciated!

Danielle