Author Archive
Bona Fide Buyer or Broke & Busted?
Posted on April 30, 2015 byMany Buyers start house shopping without even knowing the price range in which they are qualified. At Sell Fast Realty, our company policy is that the Buyer must be pre-qualified by a Mortgage Lender and has already submitted all their financial documents so their debt to income ratio can direct them to the correct price range of homes. I get a lot of Buyers who have no idea if they can qualify for the price of the home that they want to buy. My Mentor Students and I use my Buyer information sheet to pre-qualify all of our Buyers.
- Are they a Homeowner, Investor or Realtor?
- Their full name, telephone number and email address.
- What are their wants versus needs: how many bedrooms, bathrooms, and then garage/pool etc.
- How much money do they have to put down NOW? (Notice the now, because they could be waiting on income tax refund, lawsuit or gift money etc.
- How much can they afford monthly? I use this rule of thumb: If a house is selling for $100,000 then their monthly payment will be close to $1,000 principal, interest, taxes, and insurance (PITI). However with lower interest rates, then their payment would be lower).
- Are they a CASH or Mortgage Buyer?
- If Cash, then what is the price range they can afford? We would request a bank/IRA/investment statement showing this amount.
- If they are a Mortgage Buyer, have they been pre-approved and for how much?
- How is their credit? Good, Fair or Poor and what is their credit score?
- Have they ever filed bankruptcy and when was it discharged (Chapter 7) or dismissed (Chapter 13)?
- How soon are they looking to move and why?
Before I give information about the house that I am selling, I will ask these questions. If they are represented by a Realtor then I want to know if they are a CASH, FHA, VA or Conventional Mortgage Buyer. Read More→
Rehab Jungle in Short Sale Land
Posted on April 3, 2015 byThere are times when we are going to purchase a short sale and then rehab the property for a higher profit. During the rehab on the property, I take my partners shopping. We go to Home Depot and look at all the items I normally put in my cookie cutter houses and I show them why I have chosen each and every product. Then they get to pick their own products and we discuss the price differences to analyze the affect on our profit. It is really fun shopping for an entire house in Home Depot, but the bottom line is to save money. After our trip to Home Depot, we will head over to the cabinet shop if it is a higher end property and we will pick the cabinets and handles. Then we are off to the granite company with a piece of floor tile and a cabinet door so that we can match our granite throughout the house. I call this program my Mentor Program as I bring everything I have learned and taught through my Real Estate Junkie course to my students. By the time we are done, it’s been a “power-shoppin’ day!”
I always recommend that you have a Pro Account at Home Depot which gives me an automatic 10% off everything and if you are a member of a REIA group, you can save another 2% so … working with me already has saved you the cost of a new kitchen on the rehab or more. Read More→
INVESTOR MATH QUIZ: “XX” Hours = $65,000 Profit
Posted on February 27, 2015 byLet me summarize with a question before I start writing….How many hours in your current job or situation will it take for you to make $65,000? For most, this is more than an annual income, so I know your answer would be 2,000 hours or more. I didn’t count the hours on this deal, and we haven’t closed yet, but I know it will be double digit hours, not in the thousands. If someone has told you that short sales don’t work, they either didn’t have the right partner, weren’t properly trained/educated, or……..they are lying to you because they want all of the short sales to themselves and don’t want you as competition.
My office exploded in December! I’m thinking “time off, relax, jingle bells” but I had a short sale deal that had other plans for me. I ended up at the City of Margate fighting two liens that were filed against my short sale deal, in addition to a $2,300+ water lien. Lien #1 was for a Dirty Pool and Lien #2 was because seller did “not” file a Vacant Home Affidavit, Lien #3 was the water. The total due, without the Water Lien, was over $40,000. The Lien notices were attached to the front door, which was covered like a jungle, on April 7, 2014. I represented the Seller as a Listing Agent and the Buyer as a Selling Agent. I got a Power of Attorney from the Seller so I could appear before the City of Margate and negotiate the liens. Whatever was agreed upon at that hearing would be set in stone and could not be re-negotiated. Before we could even get the City to stop assessing daily fees, the dirty pool had to be cleaned. We didn’t know there was a Water Lien of $2,300+, as the lien that was recorded was only for $500.00 but the City charges a maintenance and garbage fee monthly of $70.00 no matter if the water is on or off. Not Good! I needed water in order to drain the uncovered pool (no screen) and refill it. Read More→
Wells Fargo Paper Pushers are a PAIN!
Posted on January 30, 2015 byIn the past several months, Wells Fargo has taken on a new policy wherein they want a copy of all lien releases for any outstanding liens on the property PRIOR to submitting the file to the negotiator for review. They are now pulling their own title work and reviewing it to make sure that all liens are being reported to them. This may cause a huge battle because often the Second Lender will not approve the lien release until they have the written approval from the First.
I have always said that Wells Fargo is one of the strictest Banks that requires a crazy amount of paperwork for them to move forward. We recently had a file wherein the second mortgage, even though they had a second mortgage on the property, took the Sellers to court on the Note and received a Final Judgment against them. The seller was even garnished. However, in Florida, if you are head of household, you can stop the garnishments if you do not agree with the garnishment, so that ended. We have been fighting with a Negotiator that cannot put the second mortgage payoff and the Final Judgment Payoff together as one.
The Bank Negotiator keeps asking for another payoff from Citi Financial which is both the second mortgage and the Final Judgment Plaintiff. She just can’t get it thru her head! We have gone over her head multiple times to a supervisor and she refuses to submit our file. I requested a copy of her title work so we could see what she is seeing, but she just keeps sending us the recorded page number of the Judgment. We have contacted Citi Financial and they said yes this payoff includes the mortgage and the Final Judgment. We have asked Citi Financial to state that in their letter but they complain that this is a standard letter and it will not be tailored to the request of the First Mortgage Company. Read More→
Year-End Blow Out For Short Sales!
Posted on January 1, 2015 byExperienced Negotiators, you and I, know that December is time to help the banks clear their books. Since many of the Bank Negotiators get bonuses, they want to see as many short sales close as possible in December.
Recently, we fought on several deals wherein the Banks kept asking for higher counter offers. Holding off until the beginning of December can put more money into your pocket. In Florida, the Banks pay all property taxes at the end of November, just before the due date, so they don’t get penalized. After that date, when you make offers, the taxes are paid and the Bank’s net has increased versus what they would have received in the month of November when taxes were not yet paid. Recently, we were fighting with a lender over $2,000 on the purchase price because the bank wanted a specific net. You might say ‘that is not much,’ but once the taxes were paid, the bank’s net was higher. Remember, that once the taxes are paid, they are no longer on the HUD as a deduction to the banks net, so by default the bank’s net increases. Did the bank still pay them either way? Absolutely, but that doesn’t affect us. The investor’s offer no longer needed to be increased to reach the bank’s net and that’s all we needed. The investor’s offer was now right in line with their value to receive short sale approval. Read More→
Foreclosures Flying Through Courts – Deficiency Judgments Soaring
Posted on November 28, 2014 byIn January of 2014, Florida passed a law that allowed the Banks to push their foreclosures through the court system faster than the normal 879 days that it used to take. I have seen foreclosures go through the court as quickly as 4 to 5 months because the Sellers, even though they do not have an attorney, do not take the time to file an “Answer” when they are served with the Summons and Complaint. An Answer, in which they themselves can file, simply states that they would like this matter set for trial. This letter includes the caption of the court pleading and their address and telephone number. They would have to file this Answer with the Court along with a Proof of Service that they mailed a copy to the Attorney representing the Plaintiff (Bank). Once an Answer is filed, the Court must slow down the Foreclosure proceedings to allow enough time for the proper hearings that are entitled to the Sellers.
I used to advise my students to wait to send marketing letters to Sellers who were in Foreclosure for at least 6 months. Times have changed! I am now recommending, due to this new law, that the marketing starts as soon as the Notice of Lis Pendens (a document letting the public know that the Sellers are in Foreclosure) is served to the Seller. Many Sellers are running scared. They are moving out before they even have time to fight the fight. I say “Don’t Run and Don’t Let the Bank Win” and do a short sale. Even if you are doing a Loan Modification and/or Short Sale, the Bank is still pushing through the Courts to get a foreclosure hearing date set. However, a short sale takes control of the Sellers destiny. Read More→
Changes in Short Sales – Are You Keeping Up?
Posted on October 31, 2014 byEvery day the Banks are making minor and/or major changes on how they do short sales. What was once an easy short sale system, now varies depending upon each lender. Many lenders will want the Sellers to use their own in-house short sale package, even though my detailed generic package pushes the deals forward. Sellers really don’t have a true concept of how much debt they have when it comes to paying all of their debts. Many of them will not even include a debt on their financial statement to the lender, just because they are choosing not to pay it. In my short sale system, I have created a detailed short sale package with forms that are used to help my Sellers make sure that everything is included and maximize their chances in the consideration of the short sale.
In January of 2014, Florida allowed a law to be passed that the Short Sale Lender may receive a Deficiency Judgment at the time of the Foreclosure while still having the asset (property) in their portfolio and not even selling it yet. Before this law was passed, the Short Sale Lenders could foreclose on the property and then they have a choice whether or not to either forgive the debt or pursue the Sellers. If they forgive the debt, they still issue a 1099 (Forgiveness of Debt Form) which means the Sellers would have to pay taxes on the amount that the bank has forgiven. Or the Lender could go after the Sellers again by filing a new lawsuit for a Deficiency Judgment on the balance that is owed AFTER the Lender sells the property and releases it from their portfolio.. Many Short Sale Lenders are amending their complaints to request this immediate deficiency judgment. Sellers are blind to the new changes and they are burying their heads in the sand, thinking they are living in the house for free and then letting the property go to foreclosure with no repercussions. Read More→
Stated Income Loans are Back for Investors!
Posted on October 1, 2014 byI recently had a transaction wherein the Homeowner was attempting to use a Stated Income Loan Program which requires 1) that the property be purchased in a Limited Liability Company and 2) a 35% to 40% down payment. I was very concerned, yet excited about the Loan, due to the fact that these lenders are very picky and it was a new loan product for Investors. The mortgage broker that I was working with had “NO doubt” that this Buyer would be entitled to this loan, considering that he was giving such a large down payment.
Well … that is when it all started. After the appraisal was done, survey completed and the loan was being submitted to this Lender in St. Petersburg, Florida, all we were waiting for was the hazard insurance policy. However, the lender decided to use a program called CoreLogic which tracks if the Buyers currently have or previously had any outstanding mortgages and guess what? Yep, they did, and I was furious! This mortgage should have shown up on his credit report and when title work was pulled for a name search for the Buyer, we should have been notified that he owns another home. However, there was a HUGE lack of communication with the mortgage broker and the Buyer. The mortgage broker did not speak the native language of the Buyer. So … when the mortgage broker asked the Buyer “do you have any outstanding mortgages on any homes,” the Buyer replied “no.” However, they did say that the old mortgage they had on their personal house was “short-saled” and since the Bank wasn’t reporting it on their credit, the mortgage broker never mentioned it to anyone! This was a big mistake and costing the Sellers, the students and I, lots of time, money and effort to get this deal to happen. Read More→
Does Your Title Company Have Your Back?
Posted on September 2, 2014 byAll Investors and Realtors need to know the guidelines of their Title Company’s requirements for buying and flipping short sales. Each Title Company may have one or two underwriters which tell them how to conduct their business. I am a firm believer in having all my i’s dotted and my t’s crossed with full disclosure. Whenever I want to use the end buyer’s money to fund the first transaction “A to B” closing, I have already sent all my forms to the Title Company to send to their underwriter to review. This way, I will not have any problems when it is time to close. Some Title Companies will require additional documentation and others approve my forms and are ready to close, saving you points and interest on hard money.
Recently though, I had a short sale closing set on Friday with a Foreclosure Auction set on the following Tuesday, leaving 3 days after the closing to get them the money (which must be certified funds), and have them stop the Foreclosure Auction Sale. Obviously, when purchasing short sales, we don’t want to procrastinate it to the last minute due to the new guidelines with the Florida statutes about the timeline for postponing Foreclosure Auctions. These guidelines of making sure that the Plaintiff’s Counsel and/or the Defendant’s counsel has filed a Motion to Cancel Sale at least 10 to 15 days prior to the actual auction make it difficult to get Fannie Mae and Freddie Mac to act due to the fact they follow that guideline. Meaning, if you have passed the window of the 10-15 days and it’s down to only 8 days before the sale date, they will say you missed it and it’s too late to request postponement. However, there are times when “stuff” happens and you close within that 10-15 day timeline, not giving the Plaintiff’s Counsel enough time to get a Motion to Cancel heard before the original Judge. Our court system has turned into a mill! Even if both parties agree, Plaintiff and Defendant, they are having a hearing before the original Judge. When I worked for attorneys, all you had to do was prepare a Stipulation and Order of Postponement and/or Cancellation, both parties would have agreed and the Judge would sign it without a hearing. I believe the Plaintiff’s attorney just likes to charge the bank more money for representation and this would be too easy for all parties. The Foreclosure Auction could be held on line or before a different Judge that does not know the Seller’s situation, nor do they care. Many times, if the Sellers wait to file their Motion to Cancel in Pro Per (acting as their own counsel), the Foreclosure Auction Judge will deny it versus the Judge who has heard their case all along. Read More→
Short Sale Lenders Present Tough Restrictions “In-Deed!”
Posted on July 28, 2014 byI received several emails after my article last month regarding “Are Investors Flipping over the Gray Line.” The questions were about Land Trusts and transferring the beneficial interest at the time of closing. So … I am writing to all of those individuals who might be ‘Flipping Over the Gray Line’ but not really knowing it. Or maybe you are being coached by mentors and/or partners who are advising you that this is alright to do. If that is the case, then I want you to fully realize who will be liable for the wrong doing.
First off, the Short Sale Approval Letter and the Short Sale Arm’s Length Affidavit will advise you how you can conduct the closing regarding several factors: Closing Date, Approved Short Sale Amount, Approved Commission and Closing Costs, Approved Buyer Name, and any Deed Restrictions such as how long the new Buyer must hold the property before selling the property or if you are aware of any other agreements to sell this property to someone else at a higher price. All of Bank of America’s short sale letters and/or the Short Sale Arm’s Length Affidavit state that the Buyer cannot resell the property for 30 days. However, sometimes the Title Company, due to the wording in the Short Sale Approval Letter and/or the Short Sale Arm’s Length Affidavit, is not instructed to place this restriction directly on the Deed. This is where the Investor/Buyer thinks they have found a loop hole! The Investor/Buyer will close with Title Company A and then the same day or shortly after will turn around and close with Title Company B who has no knowledge of the Buyer’s requirement to hold the property because they did not do the first closing. Read More→
Are Investors “Flipping” Over the Gray Line?
Posted on July 1, 2014 byRecently I got a short sale approved on a 4 bedroom, 1 bath for $43,800.00 and my partners and I were going to flip the property to another Investor. However, after reading the required verbiage that the loan servicer required to be written into the Deed, it made it impossible to sell the property on the same day that we purchased it. The servicer was Bank of America and the Seller was going through the HAFA program. Bank of America always places a 30 day hold on the property. In addition, item #8 on their Approval Letter states “Another buyer cannot be substituted without prior written approval of Bank of America. The buyer may not alter how he will take title. For example, a buyer may not enter into a contract to purchase a property and then amend the contract to purchase the property as Trustee for a trust or any other legal entity.” Based on that verbiage, you cannot close in the name on the approval letter and then immediately place it into a Land Trust, even though I hear people state that the Land Trust is for Asset Planning. I totally disagree with the fact that a Land Trust is used for Asset Planning, as it only covers who the beneficiaries are, and the Trustee is responsible for signing all the documents. In addition, this means you must not sell the property to anyone until 31 days have expired. There are ways around the 31 day hold; however, I only teach that Super Secret at my Foreclosures Gone Wild Boot Camp. Check my website for the next event.
On the HAFA Short Sale Affidavit, which all parties sign including the Realtor, it states “(b) There are no agreements, understandings, contractors or offers relating to the current sale or subsequent sale of the Property that have not been disclosed.” What this means is that you cannot have a signed contract with another Buyer to purchase the property from you until after the sale of the property. Read More→
Investors Gobble Up Profit on Their Own Deals
Posted on May 31, 2014 byI partner with my students on short sale deals and my Mentor students on all types of deals. As a mentor, my students obviously learn the importance of negotiating as low as possible in order for us to get a good deal on a property. But even after the student has negotiated as low as they can go with the Seller, I will walk through the house and tell the Seller that the price that my partner offered is too high. I finish up by negotiating the property even lower. Why? Because my students are just looking at the front end of the deal and I’m looking at all the expenses to purchase the property, private or hard money interest and points, and the rehab costs for materials and labor. In addition, I’m looking at the cost of insurance, taxes, and the utilities plus the hold time until we sell it, the cost of another Realtor to sell it should the student not conduct open houses/auctions to sell the property themselves.
It’s really hard for my students to see the entire back end of a deal when they are just focusing on the front end. When we go to Home Depot, we must be aware of which features sell a home. Kitchens and bathrooms sell BIG, so we spend extra money in those areas. We get nicer cabinets, granite countertops, medium grade faucets and lights that all match the hardware throughout. Recently I have negotiated and closed several short sales and straight purchases that need rehab. I always stay with a neutral wall color (Behr Toasted Cashew – a light beige), flat white ceilings, and semi-gloss white around the trim and doors throughout. The walls and ceilings are a knock down texture throughout for consistency. Read More→
