Short Sale Media

May 4, 2009

The Importance of Prescreening Your End Buyer’s Financing

Filed under: ARTICLES, ASK THE EXPERTS — admin @ 2:31 PM

money20picThe Importance of prescreening your end buyers financing.

Hi guys, this is Bob Lachance from North Shore Enterprises with your Pre-foreclosure Tip of the week! This week I will be going over the importance of pre-screening your end buyer and their financing.

Just so I am clear, this blog has to do with a traditional short sale where we buy a property (via a short sale) then we resell it. Here are 3 points to look out for while pre-screening you end buyer’s financing:

Point #1

If you are buying a property with the intent on reselling it within 90 days of your purchase, then make sure your end buyer does not have an FHA insured loan. The reason being is that an FHA insured loan requires title to be seasoned for 90 days.

Point #2

If you are buying a property with the intent on reselling it within 90 days of your purchase, make sure you disclose to the end buyer’s lender that your intent is to buy it via a short sale and then resell it for a profit. This is exactly what we do and it makes the transaction smoother and it will allow you to make sure this does not blow up at the closing table because the end lender had an issue.

Point #3

If your client is only putting down 5% on a conventional loan, make sure to ask the loan officer if the county that the property is located in has been flagged as a “declining market”. Around 90% of all Counties are flagged as “declining markets”. The main reason we want to know this is because the buyer will have a very challenging time getting mortgage insurance (MI) unless they put down another 5%!

With that said, I’ll see you next week with the latest news from the trenches!

More Lenders Allowing 2nd Mortgage Discounts

Filed under: ARTICLES, NSE HOMES — admin @ 10:03 AM

lendersMore Lenders Allowing 2nd Mortgage Discounts

These days many 2nd mortgage companies are now asking for 10% of their principal balance in order to release their lien. Prior to these recent changes, ALL 1st mortgage holders allowed a maximum of $1,000 to 2nd mortgages, period. Once 2nd mortgage holders started demanding 10%, it made obtaining approvals from both mortgages quite challenging. After all, 10% is quite a large number! And most 1st mortgages will only allow a maximum of $1,000 right?

Well luckily for us, 1st mortgages have paid attention to the changing trends and have changed their policies to match. Now, more and more 1st mortgage holders are allowing a payoff of 10% to 2nd mortgages to avoid any complications. And for us short sale specialists, this is perfect! One of the lenders that have started to be more open to this policy change is ASC.

Keep in mind, not all 1st mortgage holders are doing this, and it is on a case-by-case basis, but, they are at least open to it and some will approve 10% to be paid to 2nd mortgage holders. Try to determine your particular investor’s guidelines. Some 1st mortgages will only require that their net amount is met, and they won’t have any restrictions on how it happens. But in all cases, it is worth pursuing getting them to pay 10% to the 2nd mortgage, because you just might get it!

Strategy:
When it comes to actually putting this knowledge in practice, the best way to approach it is this: initially offer $1,500 to the 2nd mortgage, that way you can negotiate up with them. On the HUD that you send to the 1st mortgage, include a payoff amount of 10% of the 2nd mortgage’s principal. That way, you can initially explain the situation and try to get the full 10%. Otherwise, you can still hopefully get the 1st mortgage to pay above the $1,500 you initially offer the 2nd, so both mortgages feel like they’ve won!

April 15, 2009

The Key to Closing Your Short Sale Transactions is Getting Everyone On Board!

Filed under: ARTICLES — admin @ 10:03 AM

agentpic

The Key to Closing Your Short Sale Transactions is Getting Everyone On Board!

Our job as real estate short sale negotiators is to essentially, “make everyone in the transaction happy.”  In some cases, that is much easier said than done.  In other cases, everything comes together quickly and smoothly, and it seems like we get off the hook almost too easily.  Now, while the latter situation definitely occurs quite often, we need to be prepared to deal with those situations when it may be a bit more challenging to complete a short sale.

Perhaps the biggest key to getting these deals done is setting proper expectations with everyone involved in the short sale transaction.  We’ve said it a thousand times, but if it’s not done, then the deal will not close!  That is a fact; so it is imperative to set the proper expectations right from the start, and to let everyone know what they can expect throughout the short sale process. That way, it will be much easier to get all party’s on board (buyers, sellers, listing agent and selling agent) with the current offer, which will educate them on what they can expect out of the transaction, from the commissions paid to the realtors, all the way to what a 2nd mortgage may request out of both a seller and a buyer. For more on setting proper short sale expectations visit www.RealEstateBusinessMentors.com and see my article titled “Why Buyer’s Agents Ruin Short Sale Deals”.

Another major part of getting everyone on board is stepping in and embracing your role as a short sale specialist, and truly coordinating the efforts of everyone involved and facilitating the transaction.  From telling the listing agent how long the process is going to take to working directly with the buyer’s attorney or Title Company; you have to make sure that you’re delivering all the important short sale information that they need in order to complete the tasks required of them.

When you’re speaking with lenders, that information will be everything from:

  • the short sale package
  • down to how long the buyer will need to close
  • the type of loan the buyer is obtaining
  • the seller’s and buyer’s attorney information or the title company information.

Make sure you are armed not only with the current offer and evidence to get your short sale accepted, but that you can also provide the lender with all of the details of your States closing and settlement process.  If you’re able to speak knowledgably about this information it will aid in your efforts to get them 100% on your side to get the deal done!

The bottom line is, make sure you spend the time setting expectations, determining what everyone involved in your short sale transaction is seeking out of the deal, and be prepared to present all pertinent information to both sides, so that they can be reassured that the transaction will happen, and that they aren’t just wasting their time.

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