Is it me, or is it the short sale system???
I have been working short sale homes now for about 3 years, ranging in price ranges from 1 mil, down to 30k. During those 3 years, I've worked probably about 60-80 properties, and closed on only FOUR. Over those 3 years, I continually see people professing that they have an 80% closing ratio, and average 30k profit per deal. My average profit on the 4 success' was about 10k.........and that was on the higher end homes too. I had a 600k home that I made 10k, and a 30k home where I made 10k. Don't get me wrong, I'm happy that I closed on what I did, but are the numbers that I'm hearing out there from other people for real, or is it me? Marketing/exageration is out there, no doubt, and I don't have a clue if my figures are typical. Personally I feel like they're terrible, and why I continue to do this I don't know.
Here's a real life example of 95% of my deals: Home is 200k, my offer is 155k. We go thru all the short sale paperwork, then the BPO (and yes, I met them at the house with low comps, repair estimates, etc.) comes in at 195k. They turn down my offer, won't counter my offer, and the property ends up going to foreclosure............a waste of 2-4 months of dealing with the homeowner and the mortgage company.
Is this typical for most of you out here? Let me know. I appreciate any feedback.
Replies to This Discussion
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Permalink Reply by Marcy Moyer on
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Or maybe your market is just that bad. The market in the SiliconValley is on fire so what you experience will never happen here.
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Permalink Reply by Joseph Alfe on
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Like I said, location makes a difference, but you do not know what they will ultimately approve. On paper, the deals I mentioned didn't make sense for them to approve...I mean, come on..$2,000 cashflow on a 40K purchase? My investor friends love me LOL.
I have gotten big discounts on Chicago's Gold Coast as well, one of the top three affluent areas in the country.
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Permalink Reply by Eddie Kearns on
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Alright! Thanks for the input.
A couple of areas to clarify:
1) I am an investor, not an agent, so I don't have the properties listed, I'm making an offer to the agent who has them listed.
2) I DO flip the properties I purchase. Not necessarily the same day I buy them, and sometimes it might take a couple of months to get the rehab done (if there is rehab). Of course, the less time I have to hold them, the better, so if I CAN do a same day flip, I will.
3) I have my own funding.
For those of you who are anti-flip, Wal-mart "flipped" that bath towel to you that you bought there last week, and McDonalds "flipped" that medium Diet Coke to you too, and they both made a profit. Don't preach to me about the evils of flipping........that's how business works.
I'm going to make my questions really simple. Your input is appreciated:
1) ______________ does my short sale negotiations for me, and I pay them ____________.
2) ______________ are the lenders that I avoid, and I don't try to buy the property is they are the lender.
3)_______________ is the % of my initial offer to the lender, based on what I feel the BPO/appraisal will come in.
4) If the loss mitigation specialist says "the BPO came in at $200,000.00, and your offer of $172,000.00 is too low. Your next statement to the loss mitigation specialist is_________________.
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Permalink Reply by joe beauchamp on
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Servicers are very imprecise. Don't look at a "bank" as some intelligent monolith, it is made up of investor, servicer, bureaucrats, drones masquerading as negotiators and some capable negotiators. Each with its own agenda and poorly coordinated.
WF used to be the best servicer to deal with, I put them a few levels below BOA (who I thought was the worst until my recent dealings with WF).
What will be accepted is different for the different investors.FHA is easy - they need to net 88% of their BPO. I had a Freddie Mac negotiator at BOA accept an offer then reject it because he said Freddie guideline is that Inc/LLC must pay 100% BPO - full value.
Banks are not obligated to do short sale, servicers lose money by succeeding in short sales (they are paid by the investor to "manage" the account).
My point is that you may have good questions, if they were about some consistent, upright entity. But, they are not. All I do is short sale, most people here are agents who "enjoy" dealing with banks and their semi-arbitrary ways - my clients prefer to deal in real estate sales and leave the short sale frustrations to our company.
There are no real hard fast honest answers to your questions.
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Do you handle package submission and negotiation for people like myself? Is that what you do?
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Technically I work for the sellers best interest, but I understand that getting you to the closing table is best for the seller. PM me for more info.
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If you are asking me, well, our clients are listing agents and lawyers. Almost everything is geared toward the seller. The bank requires that the property be listed by an agent. I never think of myself as working for the buyer because I represent the seller to the bank. However, my goal is to protect my client and the seller and to get the deal done. I don't ever think I've run into a conflict with agents/seller/buyer - we always seem to be on the same team.
My client is kept informed but otherwise only involved for writing addenda or if I find the seller unresponsive, and closing.
Since we only get paid at closing, and I have not seen banks undervalue a property for at least a year, usually significantly inflating the value, I'm not interested in lowball offers only - just lost time and money to me. [BTW, via Equator, BOA keeps a grade card on each agent in the system - you do nothing but throw lowballs, late responses, etc, it will catch up to you. But that is a minor issue compared to just getting reasonable response from the bank, usually.]
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Permalink Reply by Cindie Schulz on
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If you are the type of investor who has success getting the distressed homeowner to trust you and you are submitting low offers that are not being accepted, you owe it to the homeowner to have a licensed agent who has been trained in shortsale to take over the transaction when your offer is not accepted.
This way at least the licensed agent will have an opportunity to help the homeowner avoid foreclosure and sell the property to a retail buyer.
There are so many of these so called "investors" that are harming the homeowners rather than helping them. Don't be one of those investors. Refer your turned down transaction to a licensed agent in your area. I'm sure you will be able to find someone qualified here on this forum.
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The properties are already listed with an agent. Most all of the agents in my area have been advised not to deal with the mortgage company on behalf of the homeowner (practicing law without a license possibilities). I'd LOVE to let the agent do the negotiation (see my track record for my horrible success %). If the lender doesn't accept my offer, the agent can certainly submit a higher one, if they have a higher one, and usually they don't. At least if I fail, the agent will THEN know the price it's going to take to get the property sold.
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That is a shame the agents can't deal with the mortgage company. What state are you in? If licensed real estate agents can't help the homeowner then who is? Just investors? I find that hard to believe. In california we are able to speak to the lenders on behalf of the homeowner.
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Permalink Reply by Denise Hippert on
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Cindie - I'm in New Hampshire and was negotiating all of my short sale listings until recently (with a 100% success in avoiding foreclosure). The state banking commissioner interprets the SAFE act as requiring a lending license to negotiate short sales. The fines are huge and include giving up all commissions earned on SS deals. So, my managing broker brought a licensed lender into our agency - she does only short sale facilitation, no lending. But, she's only as successful as the Realtor she's working with on any given deal. I'm still the one who makes sure I give her a complete package, I'm the one who implements a realistic and strategic pricing plan, I meet the appraiser or BPO agent, and advise my clients in negotiating offers. I get status updates on my shorts on a regular basis and pass that info along to all parties.
So, the state law shouldn't prevent us from helping people avoid foreclosure. It's a real shame when an agent takes a short sale listing and doesn't have the knowledge or experience, not to mention, doesn't have a strategy to get an offer that will be acceptable to the bank. If we all had a nickel for every lowball offer we see on our SS listings...and how many times do we hear an investor like Eddie tell us he knows what he's doing and we should submit his lowball offer to the lien holder...
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Permalink Reply by Smitty on
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Cindie, The banking commission may have "interpreted" it one way, but NH LAW 479B specifically outlines how to negotiate short sales WITHOUT A LICENSE and exempts brokers, and real estate licensees.
http://www.gencourt.state.nh.us/rsa/html/XLVIII/479-B/479-B-mrg.htm
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