All Forum Posts by: Mitch Freed

Then you didn't do your due diligence and probably bought a useless piece of paper....especially if the first is going to foreclose. Then you lose.

Most banks require that the property be listed on the market before they consider selling short. They want to see an honest effort to sell the home first...then if no offers received the price gets dropped and eventually gets to the point where it is in short sale.

Just because the home is listed with an agent doesn't mean you can't negotiate the sale. The seller can call the bank and give you authorization to negotiate your offer once it is submitted without giving you authorization to look at all their financial info that they have to submit in a short sale package.

Just be sure to do due diligence before calling the agent to write an offer...if you know more than they do they will be more apt to work with you, and could help in persuading the seller to let you negotiate. The agents don't want to do a ton of work when they aren't going to get paid any more commission. In fact, they will get paid less when the bank dictates 5% instead of 6%.

Yea I have no problem with the lease option while they build up their credit..I was just saying that working deals that allow the homeowners to stay in the same home after they were foreclosed on is a bad idea.

The post I quoted stated "reselling to current owners." Which I am sure most people agree is a bad idea. Mainly because if their lender took a discount to sell the home, then the previous homeowner probably can never come back into possession of that home...I would imagine any Jr. Lienholder whose lien was either wiped away via trustee sale or released via short sale would be pretty unhappy if the previous homeowner bought back the home from the investor at a later date...would be mortgage fraud I believe.

But, different home, lease option, no problem. Higher risk factor, but if they weren't in trouble due to consumer debt and you confirm that their income supports the monthly rent, then I'm sure they would be a good lease/option tenant.

The Trustee Service running the sale may be of some help. The larger trustee companies have websites that list all the homes going to auction. You may be able to purchase a prelim from that site for the property going to auction.

Here in Oregon I met with a few title agents, explained to them exactly how I would be purchasing properties (auction, short sale, etc...) and informed them that if I was to purchase at auction then I would need a pre-lim first. Initially I ran into the same problem that you are..they explained that a pre-lim happens when a transaction is opened. I told them that I would be opening up a transaction with them after I bought the property at auction. They are now doing free pre-lims for me because they want my business when I sell the homes that I buy.

There is another report that you can pull..a Monetary Lien and Encumbrance report. They don't need to open up a transaction to do this. You might want to bring that up the next time you talk to your title co.

Agreed. I am starting to shift some focus to REO as well, but more in the bulk portfolio direction. If you can get enough capital to buy a bulk portfolio, customize it to your area and the type of homes you want to buy (little to no renovation, 50% of the value, etc...) then you can do much better than grinding out short sales or trying your luck at the trustee sales. With enough capital and a decent potential buyer network you could hit it out of the park in bulk REO.

The best way to find out the rules for a trustee sale are to contact the trustee and ask. The bigger companies will have web sites that list the rules. In Oregon you can email the representatives and they will answer any questions you may have.

If you contact the county clerk, the rules they give you may be for judicial foreclosure, not trustee sale. Because in a trustee sale, the county has nothing to do with the auction, the Trustee Service is running the show.

If you are going to bid at auction, then you will want to attend several before actively participating. Get to know the auctioneer and the other people that show up. You will find that the same people show up each time and these are the ones who are the serious bidders.

In Oregon if a sale is actually going to happen then the auctioneer will read all the rules before the auction...takes like 10 minutes. And here you have to bring cashiers checks and show them to the auctioneer in order to qualify to bid...and you actually secretly tell him/her what your max bid is, which they record and you cannot bid past that amount.

Dan,

Happy Easter to you as well!

Unfortunately its not really a question of legality. The listing agent could have already dropped the price if they really wanted to...all they have to do is advertise that all offers are subject to 3rd party approval. In a short sale situation, Ocwen will want to see as many offers as possible...they won't let the listing be changed to pending even though the seller has signed off on your offer. Ocwen would like you to think that they are calling the shots by "allowing" the seller to drop the asking price...but in reality they never needed their approval.

I would take this as a good sign that Ocwen is willing to deal. I am guessing that when you made the 160K offer, the list price was around 205 or 210K correct? Ocwen has now given their approval to drop that to 200 or so...which gives you a little insight on what the BPO came in at. This could be Ocwen's way of countering your offer.

You mentioned that the home needs a new roof...consider having a roofing contractor look at it and have them write up a bid to completely re-do the roof. Also consider getting the home inspection now. I typically don't spend the money on the home inspection until the bank approves of the short sale...but, if the home needs repairs then the inspection can be your best friend when negotiating with the bank. Plus, if you are already ok with the repairs then it really doesn't matter to you what the inspector finds...in fact, you will want the inspector to find a lot that would deter anybody else from buying the home. Send the inspection report and the contractors report to the bank. Even better, make sure the listing agent gets a copy, they will have to disclose it to anybody else interested in the home.

Overall, just be patient. Too many short sales never close because the potential buyers get tired of waiting.

I'm curious to know how this could ever happen? If you are buying a home from the lender, the previous homeowner has already been foreclosed on and the bank owns the home. How are you going to sell it back to them? Who will give them financing? Overall, any foreclosure situation that puts the previous homeowner back in the home, you should avoid like the plague.

My first step would be to call my good friend who is a real estate agent and have her look up each NOD to see if they are listed on the market.

You may find that these homes in default have been listed on the market for some time and they have been dropping the price substantially each week...until they get to the point where they are listing at what the seller owes the bank..maybe even listing at less to attract offers. Since most banks require a listing history for a short sale...you will want to target homes in default that are actively listed on the market.

Now for the homes that aren't listed...you can try and approach the homeowners, and you may get the door slammed in your face a lot, if they are even home. Knocking on doors is pretty time consuming and a lot of investors won't do it. Not to say that you won't have success with a home here and there...but if you have a real estate friend who would be willing to either call or talk to them to see what their intentions are...that is a less threatening phone call.

Hi Dan,

The agent who does the BPO for the bank will not be involved with the transaction. It would be a conflict of interest if the buyers or sellers agent did the BPO for the bank. You won't know when the BPO is done..because they way it happens is no different than the banks agent calling the sellers agent and requesting to see the home (they won't mention anything about a BPO...it may have happened already..it may not have.

I would recommend getting authorization to speak to Ocwen regarding the transaction. You will need written authorization from the seller that states that you can speak to their lender regarding the short sale. Otherwise Ocwen won't talk to you.

That isn't surprising that the agent got that voicemail...Ocwen is going to through you curveballs like that. Be prepared to play 20 questions when/if you get through to them and get a loss mitigator on the phone. They are going to ask you all sorts of irrelevant questions to throw you off.

Also be aware that the first and 2nd will probably be in different departments and that these two departments may not communicate with each other. You may get passed back and forth between them...a little game the lenders like to play. One will tell you that you need to get approval from the other...and so on.

I am not an agent, just an investor. The next time I talk to Natalie I will ask her about that voicemail...she may even tell me of another number that you can call that may point you in the right direction.

I just realized that you have the sellers paying 3% of the closing costs...remember that the seller's aren't paying their mortgage because they have no money, and can't net anything in closing. The bank may wonder where the seller is getting funds to pay closing costs. In a short sale, when the bank is taking a discount, technically they are the ones paying the closing costs and commissions. You offered 160k, but the bank won't net 160k, they will net 160k minus commissions and closing costs.