All Forum Posts by: Clifton Jones

I agree with Nick. If the homeowner goes to the realtor you are working with, then the realtor should represent the homeowner, not you. But, remember that if this property is a short sale, then getting the highest price for the property is not what the realtor is obligated to do.

The realtor is obligated to represent the best interests of the homeowner. Contrary to popular belief, that does not mean getting the highest offer. It is easy to show that referring the property to you without even putting it on the MLS is in the best interests of the homeowner, as long as you have a track record of closing deals (and getting the deficiencies waived).

Most of the time we receive the Listing Agreement from realtors, the area that shows the original list price is blank, which works for us. It does not provide the lender with any information on the realtor's opinion of the current market value, but satisfies their requirement that they have the listing agreement.

The comps are most important when working to get the BPO lower. See my blog on Getting A Lower BPO. If the BPO comes in too high, then you would present all of the comps to the lender, as well as repair estimates, to justify the reason you are disputing the BPO. Otherwise, presenting them is a waste of time, in most cases.

Justin, if she is helping you (and especially if you have already closed one deal with her), then bring up this issue with her. She may be willing to take over that account and work with you. It is a coin flip if you escalate to the supervisor.

We have had an issue similar to yours and escalated. This was with Freddie Mac itself, but from all appearances, Freddie Mac is no longer willing to sell properties to us in one of our DBA's because we ended up contacting not just the supervisors and upper management, but also our federal representatives.

That is a long story, but suffice it to say, we were not able to purchase that property and ever since, that DBA has not been able to purchase a Freddie backed property.

Other times, we have escalated and that has produced results.

The moral is always work at the lowest level until all of those resources have been exhausted. Then, and only then, escalate.

The realtors you deal with who are complaining need to be asked exactly what they are expecting to do to earn the commission they believe they deserve. You can then explain that you are doing all the work to get the short sale approved, and the only thing they are expected to do is find an end buyer. This is nothing more than trying to sell a home that is not in short sale or foreclosure.

If they can not understand this, then you need to tell them that they do not appear to be somebody you want to work with. If they can not see the benefit to them, then are most likely not somebody who will bust their professional butts to make the sale anyway.

Congratulations. What you did was to think outside the box. This is a great mindset for a rehabber. There are many ways to reduce costs and work when you can think outside the box.

By the way, it looks great. Keep up the good work.

The best way to find this out is to find what REO's are selling for in this area. If they are selling for more than $250K, then the likelihood of getting the short sale approved for that price is very low. If they are selling for $200K, then you have a high likelihood.

The lender will try to get the most they can from the property, so if they can get more by foreclosing and selling as an REO, then they will. The best answer to your question is to find out what the REO's are selling for.

We do not talk about the property, but about other issues, like sports, the market, anything that we feel will cause the BPO agent to point the BPO in our favor. Right before they leave, we start to walk back to the car, then stop and tell them that we almost forgot, but we have pulled the COMPs in the area and give them and any repair estimates we have to the agent.

We have a property that has been broken into twice now in the last 6 months while the homeowner was there. The state attorney issued a letter to the homeowner's lender that the state will not allow her to live in the property until after the trials, as the two people who broke in live two doors down and are out on bail.

In this case, when the BPO/appraisal is scheduled, we will be there and provide the letter from the attorney, the police reports, repair estimates, and COMPs. You will want to use the lowest COMPs you can find, but you will need at least three.

We had a BPO today and provided 8 COMPs. By providing that many, it makes it look like we were not cherry picking the COMPs to get the lowest in the area. (All of these COMPs were in the same price range, but there were others that were higher)

Regardless, any time you can influence the BPO in your favor, it is good for business. I will caution you to always be completely honest and ethical, but there are still ways to be both, while influencing the BPO. Just making the BPO agent into an acquaintance/friend can help influence the BPO.

One last thing, one of an investors proverbs is "If you are not embarrassed by your offer, it is too high."

Also, the offer will need to be explained to the homeowner, as they can and sometimes do feel insulted by our offers. We must explain to them that it is not a reflection on them or their property. The first offer is nothing more than an attempt to influence the lender to take an offer that is less than the true value of the property. You should also tactfully explain that whether the lender allowed the short sale for $1 or $1,000,000, it will not matter to the homeowner (as long as the deficiencies are waived and it is their primary residence), as they are not allowed to receive anything at close. You are helping them out by keeping them from going into foreclosure.

I applaud you for jumping in with both feet. It took us a while before we would pull the trigger and send out that first offer, but it is definitely worth the effort. Use this board and the people on here to help you in your business. We are all here to learn from one another.

Samuel, here is how we do it in our business. We pull all of the sold COMPS over the last 3 months. Even though we are not realtors, we can do this in our area because the Property Appraiser here is online and shows all properties sold.

Next, we go to Zillow and Cyber homes. We NEVER use these sites to determine the value of the property, but they are good places to identify additional COMPs. We have found that in our area Cyberhomes is usually fairly accurate, but you can not take that as gospel, since they do not necessarily use like COMPs all the time in their formula.

Once we have all of the COMPs in a 1 mile radius over the last 3 months, we average them, subtract what we feel repairs will cost, then multiply that by 70%. From this number, we subtract the profit we want to make from this deal and that will be the top amount we will offer for the property.

Let's take an example. You have a home that is worth $120,000 ARV. There is $25,000 needed in repairs (contractors estimate). You want to make $8,000 on the property. Now, we have all of the numbers we need to identify our highest offer, so that number would look like:

(($120,000-$25,000)*0.7)-$8,000=$58,500

That means our highest offer will be $58,500. Remember that the FMV is currently only $95,000 ($120,000-$25,000).

Now, we have come across properties that look extremely filthy and awful inside, but would not require a tremendous amount to fix up. We currently have one just like this. Our first offer on this property is $34,283. We never use numbers that can be evenly divided by 10 (i.e. $38,000). By using a non-conventional number, it appears to the lender that we have done due diligence and believe that is the true market value.

All of this is the easy part. The more challenging part is influencing the BPO/appraisal. That is where you make your money. The lower you can get that BPO to come in, the easier it is for you to purchase the property at a price that will allow you to make a profit.

Remember, the COMPs you use should be comparable to the property you are looking to purchase (i.e. +-10 years, +-200 sq ft, comparable bed/bath, in the last 3 months, less than a mile from the property being purchased).