After my partner submitted the fax I called the bank to confirm its receipt. I was told they had it and would be hearing from the loss mitigator at some point the following day. Imagine my surprise when, 15 minutes later, he called to discuss the offer! Here I admit I was a bit nervous because 1) I have never submitted an offer to the bank and had no idea what questions he might pose and 2) I have no experience negotiating with a loss mitigator and was afraid I’d say the wrong thing.
I had been hoping that the mitigator would call when MM was around and that he would field the call while I listened, then I could try it on my own next time. But my phone was ringing and the auction is Tuesday so I just had to suck it up and answer. I took comfort in knowing that I knew my numbers, I was intimately familiar with the specific issues in the house and I knew a few important questions I needed to ask, even if I might not be given the answers.
Fortunately I got a nice guy, Jim, who I had a great, honest conversation with, which is not the norm for loss mitigators from what I have heard. He said point blank our offer was too low and that he could not cancel the sale next week in order to get a BPO done. The auction date had already been postponed once and the bank had seen no evidence that the home owner was attempting to remediate the situation until now, four days before auction. I asked what the bank was asking for at auction, something he did not have to tell me, and he said just over $100k. I asked if he would consider a cash offer if I could get it to him by Monday to which he replied maybe. He said the offer would have to accompany a complete short sale packet and that he would have to know I was not "yanking his chain". Remember what I said about submitting a higher offer contingent upon inspection and then lowering our offer? That is exactly to what Jim was referring. I told Jim I would contact my partner and call on Monday.
To learn how I got to be this fabulous check out: www.newrichbdg.com
Thursday, July 9, 2009
Submitting an Offer or Getting Our #$%@ Together in No Time At All!
Getting the rehab estimate was our pre req to calling the bank about a short sale offer. We had an idea of how much it would cost to rehab the place but wanted a few professional opinions to confirm. Without a high repair value, we knew the bank would be reluctant to deal with us since the auction date is only a week away. While researching some questions that had arisen, my partner contacted MM, a friend of ours in the Nouveau Riche community. MM graciously offered to call the bank for us while we listened to give us a tutorial on how to speak with them.
After hours, and I do mean HOURS, of finagling the automated system, getting connected to the wrong person and sitting on hold only to land in a voicemail box we FINALLY got through to the guy in collections just below the loss mitigator who had been assigned our property. Mr. Collections advised us to submit an offer directly to the loss mitigator; not a short sale packet, but an offer, which consisted of the MLS standard purchase contract, a disclosure form and a cover letter with a brief paragraph explaining the situation and the home condition (since there was no hardship letter, estimates, or financial docs accompanying our offer).
MM generously assisted us with filling out the purchase contract, which he provided. He also informed us of the need to send along the disclosure, which he also provided, and suggested that we briefly explain the situation on the fax cover page. Talk about a wealth of information! We put an offer together in about an hour because of MM’s assistance and were able to submit it to the bank before the close of business. Without him it would have taken us a day or two simply because it was our first time and because we had anticipated submitting a complete short sale packet, which we had been preparing, but not the purchase contract only.
The only challenging aspect of submitting the offer quickly was that each page of the contract had to be initialed by the home owners, who were all the way in Oak Forest. Fortunately my partner had nothing scheduled for the afternoon and was able to drive out to them, get the signatures and fax it to the bank from the property.
When people talk about the value found in the Nouveau Riche community THIS is what they mean! MM asked for nothing in return; we thanked him profusely and he said, “I know you would have done the same for me”, which is true. Next time we do this it will be much easier since we now know what to do, but I’ll be darned if I could have figured that out on my own! I honestly do not know how people think they can go to the library and learn how to do a short sale on their own!
A few notes on the contract. We submitted an offer MUCH higher than we were willing to pay. We knew the bank had not done an interior BPO because we asked specifically when we spoke with Mr. Collections, therefore we knew they had no idea what poor condition the home was actually in. Since we did not have written estimates back from the contractors we felt offering $30k off the bat without justification would cause the bank to reject our offer without a second glance. Instead we came in at $68k, knowing we had an escape clause in the contract that the offer was contingent on further inspection. It’s paragraph 10 of the standard MLS purchase agreement just in case you were wondering;-)
You can become a real estate investing genius too! Check out http://www.newrichbdg.com/
After hours, and I do mean HOURS, of finagling the automated system, getting connected to the wrong person and sitting on hold only to land in a voicemail box we FINALLY got through to the guy in collections just below the loss mitigator who had been assigned our property. Mr. Collections advised us to submit an offer directly to the loss mitigator; not a short sale packet, but an offer, which consisted of the MLS standard purchase contract, a disclosure form and a cover letter with a brief paragraph explaining the situation and the home condition (since there was no hardship letter, estimates, or financial docs accompanying our offer).
MM generously assisted us with filling out the purchase contract, which he provided. He also informed us of the need to send along the disclosure, which he also provided, and suggested that we briefly explain the situation on the fax cover page. Talk about a wealth of information! We put an offer together in about an hour because of MM’s assistance and were able to submit it to the bank before the close of business. Without him it would have taken us a day or two simply because it was our first time and because we had anticipated submitting a complete short sale packet, which we had been preparing, but not the purchase contract only.
The only challenging aspect of submitting the offer quickly was that each page of the contract had to be initialed by the home owners, who were all the way in Oak Forest. Fortunately my partner had nothing scheduled for the afternoon and was able to drive out to them, get the signatures and fax it to the bank from the property.
When people talk about the value found in the Nouveau Riche community THIS is what they mean! MM asked for nothing in return; we thanked him profusely and he said, “I know you would have done the same for me”, which is true. Next time we do this it will be much easier since we now know what to do, but I’ll be darned if I could have figured that out on my own! I honestly do not know how people think they can go to the library and learn how to do a short sale on their own!
A few notes on the contract. We submitted an offer MUCH higher than we were willing to pay. We knew the bank had not done an interior BPO because we asked specifically when we spoke with Mr. Collections, therefore we knew they had no idea what poor condition the home was actually in. Since we did not have written estimates back from the contractors we felt offering $30k off the bat without justification would cause the bank to reject our offer without a second glance. Instead we came in at $68k, knowing we had an escape clause in the contract that the offer was contingent on further inspection. It’s paragraph 10 of the standard MLS purchase agreement just in case you were wondering;-)
You can become a real estate investing genius too! Check out http://www.newrichbdg.com/
Wednesday, July 8, 2009
Best Way to Conduct an Estimate or Mars vs. Venus
While conducting our estimates yesterday I noticed two very different approaches taking place: mine and my partners. Perhaps this is stylistic differences or perhaps there is a wrong way and a right way to do this (or should I say one way and a better way?). Anyone who wants to weigh in on this from experience, please do!
After the first contractor I had a good idea of what should be pointed out to the next guy. My thought was to show him the work we wanted done and move on quickly. Thus the exterior of the house took me 5-10 minutes to go over with the 2nd contractor since RS was inside finishing with the 1st. I told him we wanted to repour the driveway, remove three trees, replace the vinyl siding, remove the awnings, take out the concrete stairs and replace with treated wood deck, change the doors, put a new roof on the garage and we were done.
My partner, on the other hand, caught up with us before we made it inside and re-toured the property, slowly walking the perimeter, asking for suggestions, pointing to one thing and another; asking the contractors opinion and vision casting for what we could do with different aspects of the home.
My feeling was we should know what we want, tell the contractor and be done with it; his/her only input should be if there was some glaring flaw in our plan. My partner, however, is taking the “let’s create this together” route, but that’s not really their job, or is it? Any thoughts?
After the first contractor I had a good idea of what should be pointed out to the next guy. My thought was to show him the work we wanted done and move on quickly. Thus the exterior of the house took me 5-10 minutes to go over with the 2nd contractor since RS was inside finishing with the 1st. I told him we wanted to repour the driveway, remove three trees, replace the vinyl siding, remove the awnings, take out the concrete stairs and replace with treated wood deck, change the doors, put a new roof on the garage and we were done.
My partner, on the other hand, caught up with us before we made it inside and re-toured the property, slowly walking the perimeter, asking for suggestions, pointing to one thing and another; asking the contractors opinion and vision casting for what we could do with different aspects of the home.
My feeling was we should know what we want, tell the contractor and be done with it; his/her only input should be if there was some glaring flaw in our plan. My partner, however, is taking the “let’s create this together” route, but that’s not really their job, or is it? Any thoughts?
Tuesday, July 7, 2009
Estimates or Next Time Wear Comfortable Shoes, Not Heels!
Since the owner started working with us a mere week before her auction date it was important for us to get some estimates on the repairs needed in order to make an offer to the bank, thus spent all of yesterday, Monday, scheduling 4 contractors for today. Since Oak Forest is quite a drive for me and my partner we scheduled them an hour apart, not knowing how long each would take. Our first guy cancelled a few hours prior and I unsuccessfully attempted to fill his time with another contractor. In the end this turned out to be a good thing because just three estimates took all afternoon. We had guessed an hour for each hoping it would be shorter, however the house needed so much work that each took about an hour and fifteen. RS ended up finishing with one guy while I got started with another.
Although it took a while, we learned what kinds of questions to ask and I learned not to wear high heels to tromp around a property for four hours. We also learned to see the house in a new way; we didn’t realize how much needed to be done until we started going through it meticulously. While we spent a lot of time getting bids today we may still need to get more but we recognize that we are building our team and, once we have someone who has proven himself trustworthy, we will be able to call him instead of all the “interviewing”.
Anyway, after an exhausting afternoon, we had a much more accurate picture of all the house needed and estimated our rehab costs at $70-80k. If we can negotiate the bank down to $20-$30k we’ll be in it for around $100k, sell it for $150k within a week (after the rehab that is!) and make about $30-40k profit after paying points to our financier, closing costs, title fees etc.
Keep your fingers crossed!
Curious about how I learned all this? visit www.newrichbdg.com
Thursday, July 2, 2009
The Short Sale Packet or Where the @#$^ Does One Get These Documents?
One of the biggest challenges I intially faced was getting the documents for the short sale packet. For those of you who do not know, there is wide array of standard forms needed to submit a short sale offer to a bank. The great thing about our short sale class at Nouveau Riche was that we were walked through every step of the short sale process including a line by line account of how to fill in the paperwork. What I did not realize until much later is that actually acquiring the paperwork is not as easy as googling the document name.
Lawyers want to create them for you (at their low hourly rate), companies want to sell you their software and templates to create them on your own (for special sale price), and the few “free” ones out there are crap and would need attorney review anyway, not to mention that none of the docs I found, were state specific! I felt like Harry Potter in that scene from the first movie when he's trying to get his Hogwarts letter. Envelopes are raining the kitchen from every crevice and crack; he's jumping up in the air trying to catch one, but even though he's surrounded by them he grab even one. I knew lots of people in the NR community who were doing short sales. They all seemed to have these mysterious documents, but where did they get them and, more importantly, how could I get a copy?!
And so....I asked:)
My partner, RS, texted every NR contact he had asking for assistnace in procuring documentation. Within 24 hours we had a hail storm of papers flying at us: four people generously sent their docs to us and there are still more offering to pass papers on. We have some duplicates and will figure out what works best as we go through this for the first time. Were it not for our friends in the community we could have done it on our own, but I prefer to short-cut my success.
Tony Robbins, one of my favorite gurus on personal development, suggests that doing everything youself is not the most efficient way to success, but that leveraging people who have gone before you and learning from their experience, is a a far better way. All in all the Nouveau community came through for us and I deeply appreciative to all who assisted! Thanks!
If you are interested in learning how you can connect into this incredible community of investors check out: www.newrichbdg.com
Lawyers want to create them for you (at their low hourly rate), companies want to sell you their software and templates to create them on your own (for special sale price), and the few “free” ones out there are crap and would need attorney review anyway, not to mention that none of the docs I found, were state specific! I felt like Harry Potter in that scene from the first movie when he's trying to get his Hogwarts letter. Envelopes are raining the kitchen from every crevice and crack; he's jumping up in the air trying to catch one, but even though he's surrounded by them he grab even one. I knew lots of people in the NR community who were doing short sales. They all seemed to have these mysterious documents, but where did they get them and, more importantly, how could I get a copy?!
And so....I asked:)
My partner, RS, texted every NR contact he had asking for assistnace in procuring documentation. Within 24 hours we had a hail storm of papers flying at us: four people generously sent their docs to us and there are still more offering to pass papers on. We have some duplicates and will figure out what works best as we go through this for the first time. Were it not for our friends in the community we could have done it on our own, but I prefer to short-cut my success.
Tony Robbins, one of my favorite gurus on personal development, suggests that doing everything youself is not the most efficient way to success, but that leveraging people who have gone before you and learning from their experience, is a a far better way. All in all the Nouveau community came through for us and I deeply appreciative to all who assisted! Thanks!
If you are interested in learning how you can connect into this incredible community of investors check out: www.newrichbdg.com
Wednesday, July 1, 2009
My First Short Sale or This is Really Hard Work!
After networking and researching we got our first short sale! Yay! It's in Oak Forest and an absolute dump from what I hear. The property was referred to my partner through a friend, who knew the homeowner was facing foreclosure due to the recent job market. They were behind on their mortgage payments, had already had their auction date extended once and still had not been able to come up with the fund to get current on their loan. Their second auction date was about a month away when I first contacted the owner.
The homeowner was in a state of denial and, at first, would not return my calls or e-mails since she was thinking she could avoid the short sale. I ended up writing an empathetic e-mail stating that I knew how hard her situation was and that I wanted to help in any way I could. I said I knew it was challenging to face the unknown, especially when it means something you really don’t want to happen must occur. I encouraged her to contact me so that we could get going on the short sale as a plan B, since her plan A was to earn comission through her network marketing business. She had written the bank requesting another extension on the auction date but I told her I wanted to make sure she had a safety net in case the bank would not grant the request or she could not come up with the funds in time. When she finally contacted me she said my e-mail , “hit the nail on the head”. I was able to gently speak to her fears and that motivated her to call me. Once she called we were able to get moving with the paperwork.
If it sounds like I've learned a lot, it's because I have. This is where I figured it out: www.newrichbdg.com
The homeowner was in a state of denial and, at first, would not return my calls or e-mails since she was thinking she could avoid the short sale. I ended up writing an empathetic e-mail stating that I knew how hard her situation was and that I wanted to help in any way I could. I said I knew it was challenging to face the unknown, especially when it means something you really don’t want to happen must occur. I encouraged her to contact me so that we could get going on the short sale as a plan B, since her plan A was to earn comission through her network marketing business. She had written the bank requesting another extension on the auction date but I told her I wanted to make sure she had a safety net in case the bank would not grant the request or she could not come up with the funds in time. When she finally contacted me she said my e-mail , “hit the nail on the head”. I was able to gently speak to her fears and that motivated her to call me. Once she called we were able to get moving with the paperwork.
If it sounds like I've learned a lot, it's because I have. This is where I figured it out: www.newrichbdg.com
Monday, June 29, 2009
Finding a Short Sale or 10,000 Spoons When all You Need is a Spoon
Upon returning from the college I elected to take on a business partner. Short Sales are one of the most intricate real estate transactions that exist and, while I could have done it on my own, it would have taken much longer than if I had someone partnering with me. RS, therefore, came on board and we began masterminding ways to find short sales, which, in this market, isn't terribly difficult since so many people are in loans they can no longer afford.
We began by contacting a real estate agent friend of mine, Greg, who has been invaluable in sending us properties in our area that are in pre-foreclosure. Our deal with him is if we find a property through him, and negotiate with the bank to buy it at a discount, when we fix it up and prepare to resell it we use Greg as our realtor. This might sound like it took a lot to make it happen but it was actually quite simple. Having already established a relationship with him it took very little convincing for him to meet with us, plus he's getting something out of it.
I would guess that almost everyone knows at least one real estate agent either directly or through a friend; I would encourage you to start with someone you know because it feels more comfortable. As you gain experience you'll want to contact Realtors who work specifically in the area you are buying and build relationships with others who have an excellent performance record i.e. they're selling a lot of homes! A tip a friend in the NR community gave me was to drive around a neighborhood/area in which you are considering buying and look to see which agent's name appears on the most signs. Odds are that person is getting a lot of deals done and thus a valuable asset for your exit strategy.
Another connection I made was with a mortgage broker, Mike, who I actually met in a bar several years ago. A rather drunk woman decided we made a good-looking couple and tried to play Yenta for us. We got along fine but there were no sparks, however we learned we both had an interest in investing so we exchanged information. RS and I met Mike for coffee, explained what we were dong and he agreed to refer clients to us whom he cannot re-finance or do a loan-modification for. In return we agreed to make him our preferred lender to prospective buyers on our fix and flips.
Buildling mutually beneficial relationships is my favorite way to find deals especially because the person referring the short sale to you has likely had contact with the home owner and therefore has put in a good word for you as someone who can a) educate them on their options and b) might be able to buy their house and c) isn't a scheister!
For more info on how I became such a freakin' genius visit: www.newrichbdg.com
Another option, although we have not yet gone down this road, is to hit the courthouse, which has public records of distressed properties. There are also on-line services from which you can buy lists of pre-foreclosure homes in your area. One that my friend Mick likes is www.public-record.com
From that point you can mail letters or go door to door and speak to the home owners in person. I do not recommend talking to the home owners, however, unless you know what the heck you are doing. First, if you are not educated in the different option home owners have before doing a short sale, then you are doing them a diservice. Secondly, if they choose to work with you they are putting a lot of faith in you to provide them a solution. If the bank will not accept a price that make the numbers work on your end, that's one thing, but to work with a homeowner and fail simply becasue you didn't know what you were doing is an entirely different matter.
If you are interested in getting the same education I got visit: www.newrichbdg.com
We began by contacting a real estate agent friend of mine, Greg, who has been invaluable in sending us properties in our area that are in pre-foreclosure. Our deal with him is if we find a property through him, and negotiate with the bank to buy it at a discount, when we fix it up and prepare to resell it we use Greg as our realtor. This might sound like it took a lot to make it happen but it was actually quite simple. Having already established a relationship with him it took very little convincing for him to meet with us, plus he's getting something out of it.
I would guess that almost everyone knows at least one real estate agent either directly or through a friend; I would encourage you to start with someone you know because it feels more comfortable. As you gain experience you'll want to contact Realtors who work specifically in the area you are buying and build relationships with others who have an excellent performance record i.e. they're selling a lot of homes! A tip a friend in the NR community gave me was to drive around a neighborhood/area in which you are considering buying and look to see which agent's name appears on the most signs. Odds are that person is getting a lot of deals done and thus a valuable asset for your exit strategy.
Another connection I made was with a mortgage broker, Mike, who I actually met in a bar several years ago. A rather drunk woman decided we made a good-looking couple and tried to play Yenta for us. We got along fine but there were no sparks, however we learned we both had an interest in investing so we exchanged information. RS and I met Mike for coffee, explained what we were dong and he agreed to refer clients to us whom he cannot re-finance or do a loan-modification for. In return we agreed to make him our preferred lender to prospective buyers on our fix and flips.
Buildling mutually beneficial relationships is my favorite way to find deals especially because the person referring the short sale to you has likely had contact with the home owner and therefore has put in a good word for you as someone who can a) educate them on their options and b) might be able to buy their house and c) isn't a scheister!
For more info on how I became such a freakin' genius visit: www.newrichbdg.com
Another option, although we have not yet gone down this road, is to hit the courthouse, which has public records of distressed properties. There are also on-line services from which you can buy lists of pre-foreclosure homes in your area. One that my friend Mick likes is www.public-record.com
From that point you can mail letters or go door to door and speak to the home owners in person. I do not recommend talking to the home owners, however, unless you know what the heck you are doing. First, if you are not educated in the different option home owners have before doing a short sale, then you are doing them a diservice. Secondly, if they choose to work with you they are putting a lot of faith in you to provide them a solution. If the bank will not accept a price that make the numbers work on your end, that's one thing, but to work with a homeowner and fail simply becasue you didn't know what you were doing is an entirely different matter.
If you are interested in getting the same education I got visit: www.newrichbdg.com
Subscribe to:
Posts (Atom)
