Short sales advice

**Kreative Maverick** · 01-18-2009, 11:09 PM

Hey board,

I have been approached by an owner of an investing foundation to look for short sales for him. Here are a few questions I have for you?

1. How much or how should I charge him for this service when I find a short sale?

2. Any advice where I can start to look for these?

3. Could anybody give me an example on how much the bank is willing to settle on a typical deal, or in your personal past experiences?

Also...

Second I would like to thank you for all your advice on my other threads. I have picked up some valuable info that has helped me in my deals. I am learning that the road in RE investing is a long but exciting one.

**donrock** · 01-19-2009, 10:34 PM

There are all kinds of ways to get paid. You can take a percentage of his profit although he probably won't want to disclose it. Take a PC of the deal. Take a flat fee per transaction. Have him tell you what he'll give you. It might be more than you wanted. Usually whatever it is ask for more.
As far as finding them I would suggest you pick up my free Foreclosure and Short Sale report. It has a lot of methods I use to find properties. The link is below in the signature. Try my RE blog too for ideas.
Good luck,
donrock

**thomas12** · 01-19-2009, 10:43 PM

I think you should converse with a professional in the short selling department. I have got no idea whatsoever.

**Greg** · 01-20-2009, 04:46 AM

The best deals are with foreclosures. If your buyer is truly an investor then they will want to leave the short sale go to foreclosure and then pick it up at a real bargain price.

The short sale process is so screwed up there is no way the banks can reform their system to make them work before this mess goes away.

**strategiclm** · 01-20-2009, 03:43 PM

For answers to questions 1 & 2 I would need to know more about you - Are you an agent?

For Q3 - It depends on the loan type. But for the most part lenders will take between 82% - 92% of the Appraised Value. The lender will have and appraisal or BPO done and will discount off of that value.

Now if the appraisal is "managed" this can work out very well for the buyer.

Let's say the value of the property we feel is worth 200k, the managed appraisal comes in at 185k, and the lender tales 85% of that (157k), there is definately room for a good buy here.

I have to disagree with Greg. Most foreclosures these days are over leveraged and they are no bargain. The ones that are a bargain, in most areas any way, there is a lot of competition for.

In a short sale the process itself creates the spread, so you just need to find the situation and then you have no competition.

I also disagree that the "short sale process is so screwed up". The short sale process is rather simple and straight forward. The problem is that most agents (or investors) don't understand the process, so it's kind of like they are trying to learn to ride a bike while sitting on it backwards.

It's really to our advantage that most don't understand the process, because for now those that do have a nice field to play in.

Chris

**DanielMarshel** · 01-21-2009, 04:47 AM

It is better to get advice from a professional.

**Kreative Maverick** · 01-21-2009, 05:03 PM

Originally Posted by strategiclm

For answers to questions 1 & 2 I would need to know more about you - Are you an agent?

For Q3 - It depends on the loan type. But for the most part lenders will take between 82% - 92% of the Appraised Value. The lender will have and appraisal or BPO done and will discount off of that value.

Now if the appraisal is "managed" this can work out very well for the buyer.

Let's say the value of the property we feel is worth 200k, the managed appraisal comes in at 185k, and the lender tales 85% of that (157k), there is definately room for a good buy here.

I have to disagree with Greg. Most foreclosures these days are over leveraged and they are no bargain. The ones that are a bargain, in most areas any way, there is a lot of competition for.

In a short sale the process itself creates the spread, so you just need to find the situation and then you have no competition.

I also disagree that the "short sale process is so screwed up". The short sale process is rather simple and straight forward. The problem is that most agents (or investors) don't understand the process, so it's kind of like they are trying to learn to ride a bike while sitting on it backwards.

It's really to our advantage that most don't understand the process, because for now those that do have a nice field to play in.

Chris

For Q 1& 2, I am not an agent. I am beginning in RE investing. I got in touch w/ the owner of the investment foundation and he said that let's start w/ short sales.

**Kreative Maverick** · 01-21-2009, 05:10 PM

Originally Posted by donrock

There are all kinds of ways to get paid. You can take a percentage of his profit although he probably won't want to disclose it. Take a PC of the deal. Take a flat fee per transaction. Have him tell you what he'll give you. It might be more than you wanted. Usually whatever it is ask for more.
As far as finding them I would suggest you pick up my free Foreclosure and Short Sale report. It has a lot of methods I use to find properties. The link is below in the signature. Try my RE blog too for ideas.
Good luck,
donrock

Thanks donrock, I am still learning terms but what do you mean by "take a pc"?

Also chirs you mentioned "BPO" could you enlighten me please.

Thanks

**strategiclm** · 01-21-2009, 06:50 PM

BPO stands for "Broker Price Opinion". When a lender is considering doing a short sale they will have either an appraisal or a BPO done to determine the value they will place on the property. They discount from that value.

I will write an answer to Q1 & 2 later, probably tomorrow. It will take a few more minutes to write than I have right now.