Short sales are all the rage right now. It seems like every week I get a new email from someone advertising their Short Sale package. Are you getting the same emails I am? Well, there is a good reason for that. Simply, short sales are hot.
When the foreclosure rate is high short sales are a great option in your RE investing.
There are three basic strategies on how to make money in the short sale world.
1- Put the property under contract, get the short sale accepted and then assign the contract out to a third party for closing.
2- Get the short sale approved then close on the house, fix it up, turn around and sell on the market.
3- Get the short sale approved, have a third buyer ready to sell to(usually another investor for a great price), close with hard money, then turn around as sell to the third party.
One thing you need to understand as a new short sale investor, these take time. Anywhere from 1-5 months depending on the bank and how motivated they are. Once you get a good number of short sales going then you can hope to close a few a month but it is not a matter of fast profit in most cases.
Also, there is a lot of work involved. Both form you and the sellers. Make this clear up front.
I hosted a great teleconference with David "The Diamond" Oswald last week. Is a a top expert in the field of Short Sales and I highly recommend getting on his free newsletter. http://www.davidoswaldonline.com/
Happy investing.
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4 comments:
This is all good and great, but in many cases a short sale is just that, a short sale of a house that generally will not sell for what it is worth.
How can you expect to get it under contract as a short sale then turn around and sale it when selling it is the problem in the first case?
In my area alone there are hundreds of houses, some investor and some from home owners who have lost jobs and have no income coming in. The homeowners, on average, have had their houses on the market for almost a year paying their mortgage with their savings and have had no luck selling. Now they are at a depletion point in their savings while trying to retain their home and as such are moving into foreclosure and short sale territory.
So you mean to tell me that an investor can pickup one of these said houses on a short sale, then turn around and sell the house that previously sat for a year.
That makes no sense in this market. It's not a sellers market, it's a buyers market and to say that an investor can pick up a home from a short sale then turn around and sell the home shortly after is basically lying. How many people believe this?
Don't listen to this garbage people. Logic tells us that if you pick up a short sale in this economy, you are picking up a house that won't sale for the price owned and you'll be lucky to sale it for the short sale price.
I know because I have a few short sale houses that will not sale for the price I picked them up at. I'll be lucky if I don't loose all of them to bank within the next few months.
I am concerned about your experience in short sales if you have a few short sale properties. Your whole argument is based on the fact that it is a sellers market. If you have houses you have received short sales on and they are sitting and not moving, the only reason is that you did not get good enough of a discount on those houses. Homes are still selling, IF THEY ARE PRICED RIGHT. If you do not go into your negotiations with the bank knowing a number the house will sell quickly for then that is the issue.
If you are finding houses the "previously sat for a year", which you can in just about any market now, and you know how to properly negotiate a short sale, then yes I am telling you just that. It happens all of the time.
As far as you having "a few houses now that you will not sell for the price you picked them up at" only tells me that you picked them up at the wrong price. You should have also given yourself a time period between accepted offer from the bank and closing (45 day minimum) before you closed on them so you could know if you had priced it right. If you have already closed on them yourself and you can't sell them, I would suggest selling them with seller financing or on a Lease option. The challenge with getting mortgages now has opened up more people to the world of seller financing.
Good luck and thanks for your comments.
I've made this an actual entry because to many people might not read all the comments left on a particular entry and I wanted to show the person who keeps writing that I have not fear of his comments; even if he will not disclose his name. I don’t even know if it’s a man or a woman. For our sake here, I’m going to assume it’s a man.
For full disclosure sake the person that made the last comment is mad at me because I have not published his latest new comment. He takes it as if I don't want to look bad. What he does not understand is, looking bad I have no challenge with. Letting people post things out of anger, spite and self pity, blaming their challenges on everyone else and not taking any responsibility for themselves; that I have a challenge with.
Here’s his complaint in a nut shell. He says that I and Robert Allen have ruined his life through the things he learned from us. He blames me and Mr. Allen because he bought homes in a market that was doing well and now can't unload them since the market is not doing as well. His position is that this whole real estate thing is BS and that his life is a mess because of me and Robert Allen. He claims that he lost thousands of dollars to me personally because he spent money getting educated and it was all for nothing. (Interesting that depending on him either buying my home study course or actually coming to my two day event, since he won't tell me who he is I can't tell, he would have paid between $300 to $1200 on my course. I don't know how that breaks down to "Thousands" but he is obviously miffed about the "big money" he spent with Mr. Allen and Mr. Allen doesn’t have a blog he can complain on.)
All I can say to that is I'm sorry things are not working out the way he planned. I apologize that I could not make him successful. I feel bad that he has such a bitter and angry taste in his mouth about me and real estate in general.
When someone is having a bad go at something they of course want to blame everyone and their brother. It is normal to be pissed off at whoever told you this or that was a good idea. What can I say? He's mad.
The strategies and principles must be working for someone though. I myself am in the middle of a short sale that we are projecting to make a lot of money on. I just got back from Chicago where I was speaking with a gentleman out of Denver who is making money hand over fist in bank REO's. One of my student couples just emailed me two days ago telling me about a house they took over using the strategies they learned from me with a ton of equity in it that they are going to seller finance and make a decent profit from.
The question that this person brings up for me is why does it work for some and not others? Why is it that I can guarantee, wherever this person is from, there are other investors doing just fine in this market? I guess that question will never be fully answered, at least not well enough for someone in a frame of mind where it's everyone else's fault that they are not successful. Go to any one of the real estate investors groups in your area and you will find people that are doing just great in this market. Will you find people in your exact same situation? I guarantee it. Will you find others that are pissed off because they paid for education that just doesn’t seem to be working? Yep. They will be easy to find. They tend to attract to each other and love to commiserate with each other.
I really feel bad for this person. It must really suck. I'm not going to defend myself or what I have taught him and others. I don't need to. I'm not going to get in a blog fight or war of words with him or anyone else. We all have challenges come up in our lives. I have crappy day’s weeks and months. I have had BAD deals and will have bad deals in the future. No one ever said that you or I wouldn't. I never promised anyone that there would be no challenges in the game of real estate investing. I never predicted the future of the market in your specific area. I definitely never forced anyone to buy a property.
Do I care that he is ticked off? Yep. I wouldn’t take the time to write if I didn’t. I do know that all of my students have my email and office phone number and I always answer to help in any way I can. If being mad at me helps him deal with the crap he is going through then fine. I have a stack of testimonials from others and I hear stories all the time of the exact opposite view.
The best lesson all of us can learn from this person is; when things get tough, when it really is “hitting the fan”, we all can choose to play the blame game or we can choose to get off our duff’s and move forward. That is my wish for this person. That they move forward and find a way to become successful in spite of how he feels about me or anyone else.
SHort sales are a pain in the butt. The banks are taking forever to accept. I know of three people that have lost money waiting for the bank!
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