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 Kimberley Kelly on
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Right on Bryant!!!
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Permalink Reply by Smitty on
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Eddie,
First, you should not be negotiating. Let's get that right out there. Hire someone that knows what they are doing. That is likely your first issues. The reason you are not closing properties is because your offers are too low. 60K on a 150K home IS unreasonable even if there is mold, or larger issues because the bank is doing an AS IS value, not an ARV. SO AS IS if it's worth 60K fine, but if AS IS it's worth 150 then you need to be prepared to pay in that RANGE.
I'm not arguing that properties can't be flipped. I'm stating that lender regulations have made things much more difficult. It's not finding a buyer to buy from you that's necessarily the hard part. The hard part is when you run into any large lender or investor that has affidavits, or arms length transaction statements that make you state you are not RESELLING the property immediately. I would say almost all of the larger lenders have this type of form for you to sign. Is it illegal to flip a property? Absolutely not, but is it illegal to sign this form stating you WON'T immediately flip a property and then do it as you misrepresented something to the selling lender, which is fraud. Believe me, I'm the person who is the first to say FLIP AWAY, but it is much more difficult to do in this market and you should look at dealing with smaller lenders that don't have the mounds of forms and paperwork for you to sign off on.I won't sit here and say you are necessarily harming sellers, because I don't know the details of each of the transactions you are working on, but you are not a good short sale flip investor by any means. You need to know what you are doing if you plan on flipping short sales and the fact you think lenders are going to just take a lowball offer, tells me that you don't know what you're doing. GOOD short sale investors know they have to offer $$ within range of market value. It's not to say that some lender won't allow 75% of the FMV, but you're throwing out numbers here that aren't going to work for them. You have to reach a middle ground for both the buyer and lender to come too. The 80-90% of FMV is also what they want to NET, so keep that in mind.
Gurus sound great, but I gaurantee the guru you listened to that is telling you about their HUGE profits in short sale flips, is selling a completely different product this month. Don't believe me? Get on ONE of their mailing lists and you'll see. Gurus push different products and sales every month. A true short sale flipper that does it for a living, ONLY does short sales. They don't jump on a new product every week to push, because you would never make any money as an investor if you were working on 7 different ways to invest in real estate. If that's what you're doing, you never become good at any 1.
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Ha-ha Smitty...so true!
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Permalink Reply by The Negotiator on
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You must be voting for Obama since you are against capitalism, right? If this country always made money by "helping folks" then you probably wouldn't be alive. Do you ever stop and realize that just about everything you buy today was made, put together or assembled at the "cost" of others. Maybe some little kid in China who assembled the very keyboard you are typing on now is forced to assemble it or face turmoil. What about the coffee you drink who's beans are so pleasing to your senses? Did you ever think that drug cartel's smuggle through the coffee import/export business? What if your very cup of coffee was made from beans that helped smuggle 3 tons of cocaine into the country?
Wait here's one ... how much do you want to bet that at least of your homeowners you did a short sale for could have fought the bank and won title do to bogus docs or lost bank notes? Did you advise them to fight the bank before you tried a short sale? Or did you want to make money off of "helping folks?" It is impossible to make money and "help folks" the way you are insinuating at the same time... unless you are selling Bibles... or Viagra ...
I'm sorry for the rant....seriously though, I could go on and on ... comments like the one you made, Bryant, really disturb me.
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Permalink Reply by Joseph Alfe on
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Oh here we go with the Obama thing. Stop being stupid and stay on track.
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The sheer hypocrisy of your remark is mind bending. You call someone stupid at the same time telling then to stay on topic? Really? You sure about that on? You still have 5 minutes or so to delete that one. You know, I could really say some things about you but that other topic asking us to stay professional and courteous just popped into my mind, so, I will just say this. In general, a person being arrogant and self proclaiming does not raise them up above the bar in my book.
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I did NOT call you stupid. I asked you NOT to be stupid. This forum is not a place for political ranting. If you want to say things about me, go right ahead, there's nothing stopping you. I'm a big boy, I won't cry, I promise.
Keeping it on track means just that. Your first post was right on, and I said as much, then you went off the rails.
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Where did you "ask" me to do anything? You know, a long time ago I told my wife (GF at the time) to stop being a "bit**." She was upset and cried because she thought I called her the B word. I pulled your same excuse and explained that I did not call her a B, but, rather she was being a B. At the end of the day, she was right and I was wrong. I asked for forgiveness and never used that word again. We can justify anything all day long if we want to.
You are right about the Obama thing, I'm sorry. I get emotional about capitalism because it will be gone soon if we continue on our countries socialist path (in my opinion.) Wars were fought to have the freedom of capitalism and I hate to see anyone think lightly of that.
And, I will keep my comments about you to myself. No need to add fuel to the fire.
Also, I hope you understand that my last comment (the one were dealing with) was in response to a comment made days ago. It was not a subsequent opinionated post to my original post you just commended.
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Fair enough. Touche and Truce.
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Permalink Reply by Vanessa Calhoun on
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Lol!!!
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You are unbelievably BAD at negotiating Short Sales! NOBODY who works shorts regularly would ever claim such a dismal close record. Shame on you!
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