Short Sale Secrets
by Dwan Bent-Twyford
Anyone actively investing in foreclosed and distressed properties has no doubt
come across one major problem… Finding deals with equity! Trust us, this is a
nationwide problem.
There are so many foreclosures out there; unfortunately most of the homeowners
owe what their property is worth. We find that most investors walk away from
deals with no equity. They either don’t know what to do with a no-equity deal or
they are unwilling to put forth the effort necessary to make the deal work. In
situations like this, we SHORT SALE the mortgage.
“What is a short sale?” You ask. To short sale a mortgage means getting the bank
to accept less than is what is owed as payment in full. There are several steps
that will ensure your success when short selling mortgages.
First of all, you must have the homeowner under control. Many investors are
under the misconception that they can buy the property directly from the bank
while it is in the foreclosure process. Not true! The bank does not own the
property until the moment of the courthouse sale. You can buy the mortgage and
finish the foreclosure process, but you cannot buy the property. You’ll have to
work hand-in-hand with the homeowner if you plan to short sale mortgages.
Here is how it works: A homeowner calls you and talleys he is in foreclosure;
owes $95,000 on his property; it’s worth $100,000 and he is 8 months in arrears.
He wants to move on with his life but can’t sell his house because he owes what
it is worth. Here is where you come to the rescue. You meet with the homeowner
and have him sign an “Authorization to Release” form (this gives the bank
permission to speak with you about the account) and a sales contract for the
amount you are willing to pay for his property. In this scenario we are going to
offer $50,000.
Next, you call the bank and ask for the Loss Mitigation Department. This is the
department that handles properties that are in foreclosure. Tell the person
handling the account that you are trying to help Mr. Smith with his foreclosure
and you are willing to buy the property from him. However, due to its poor
condition you are only willing to pay $50,000 as payment in full. Fax the sales
contract for $50,000; comps in the area; an extensive list of repairs that are
needed to bring the property up to marketable condition; a net sheet (a title
company will help you with this); and some really bad pictures. The bank will
then review the information and make a decision. Let’s say they counter at
$65,000; you counter again at $55,000; they accept! It’s that simple! We short
sale many, many mortgages every year. Banks are not in the business of owning
properties. They would rather short sale a mortgage than go to the courthouse
steps.
We’d like to share an incredible deal one of our Foreclosure Fortune Hunt
graduates put together. Her name is Cathi Dubois. Cathi was helping some friends
find a home in which they would live. They came across a property valued at
$200,000 in a distress situation. The property had a mortgage of approximately
$197,000 and was in need of several thousand dollars of repairs. Based on the
fact that the current owner owed what the property was worth Cathi did what any
prudent investor would do, she did a successful short sale. She contacted the
bank and began the process. Her first offer was $50,000. The bank laughed and
told her to make a higher offer. After several phone calls, the bank agreed to
accept $130,000 as payment in full. That is a $67,000 short sale! With the new
payoff of $130,000, she then wholesaled the property to her friends for $140,000
and made a smooth $10,000 in less than a week!!!
Personally, we think she gave the property away too cheap (smile). This is a
typical case where having a firm grasp on creative real estate enabled Cathi to
turn a "nothing deal” into a “something deal” just by picking up the phone. She
made money (and a lot of it) on a deal most investors would have passed by. The
bank was happy with the short sale, Cathi made $10,000, and her friends bought a
home with $60,000 equity!
So… the next time you get a call from a distressed homeowner with no equity,
what will you do? Walk away or make a few simple calls and turn your time into
cash? We certainly hope you will make the small effort it takes to short sale
the mortgage. It is such an easy way to make money in an industry where great
deals are tough to come by. When you short sale a mortgage, not only are you
helping yourself; you are helping a very distressed homeowner and giving them
the chance to start over. One can never go wrong when win/win is the solution.
Bio:
Dwan Bent-Twyford, the Queen of Foreclosures, learned the “foreclosure” business
the old-fashioned way, by knocking on doors. Her motivation to become an
investor came out of sheer desperation. She went through a divorce and found
herself a single mom not wanting to raise her child in daycare. She needed a
career that would allow her the freedom of working from home and raising her
daughter at the same time. Investing in foreclosures was the perfect solution.
She made $22,000 her first deal and never looked back.
She now successfully handles every aspect of wholesaling, short sales, buying,
rehabbing, marketing, and financing foreclosures and distressed properties. In a
business dominated by men, this amazing woman quickly learned how to apply her
unique experience to create win-win situations when buying property. With so
many folks asking Dwan, “How can I learn this business?”, she developed a
complete training series as well as a five-day “boot camp”.
Dwan Bent-Twyford now enjoys traveling and sharing her vast knowledge with new
as well as seasoned investors. Don’t miss this exciting lady!