As a Realtor

1. As a Realtor Why a Seller Might Want to Accept a Second Short Sale Offer as Back-Up? The seller wants the bank to accept the short sale. Banks usually accept short sale offers that are near market value.

2. As a Realtor • Why a Seller Might Want to Accept a Second Short Sale Offer as Back-Up? • The reasons to accept a second short sale offer in back-up and to submit that offer are: • The second buyer is might be more qualified to buy than the first buyer. • The first buyer might not be 100% committed to buying the short sale. • The first buyer's price might be too low. • The seller might not have to make a seller contribution with a higher sales price. • The seller might reduce the deficiency, if the 2nd offer price is higher. • The seller's tax liability could be reduced with a higher offer.

3. As a Realtor What is a Short Sale Addendum? You want to use a short sale addendum with your offer to purchase, Many state REALTOR® associations endorse the short sale addendum but not all of them do. If not create your own. Release of funds, Repairs, Able to submit other offers, the seller's bank may demand to see all the offers , extra costs not outlined, the Seller can accept higher offer, seek legal advice

4. As an Investor who found a short sale. Execute a Purchase and Sale Immediately list these properties for sale on the Multiple Listing Service to attract a buyer while you are working the short sale. You make an offer to the bank as THE BUYER. Your offer must be 10% to 20% less than what a retail customer is willing to pay.

5. As a Realtor Investor If you do not get an end buyer, you won’t be able to finalize your offer to purchase from the bank. You will lose the short sale. The time to locate a buyer that converts to a cash closing takes about 90 days. You want to identify the downsides of each deal. Then only if the seller is motivated and easy to work with do you start working with them. You could find a financial partner

6. As a Realtor Investor Know your product and exit strategy An investor won’t buy a $3 million dollar luxury home as it won’t provide positive cash flow if leased. You can’t sell a $73,000 fixer upper to an end user as there is no bank financing All opportunities you are reviewing are calculated by L.T.V. (loan to value). If you find a short sale property that is worth $200,000 your goal is to purchase at 50% L.T.V. or half the value. If the lender’s loan is 200K, it will have to forgive half it’s balance.

7. The seller of the property agreed to a commission of 6% to be split with the two agents in the transaction. When the transaction closed the Buyers agent only received 2% commission. Who should she seek damages from? Her Broker Seller The bank Sellers agent B C D A Feedback Question 15.

8. The seller of the property agreed to a commission of 6% to be split with the two agents in the transaction. When the transaction closed the Buyers agent only received 2% commission. Who should she seek damages from? Her Broker Seller The bank Sellers agent B C D A Feedback Question 15.

9. LEAD GENERATION As a Realtor Investor Mail Divorces Mortgage Brokers Lis Pendens Other Realtors Expired MLS We Buy Houses sign

10. As a Realtor Investor The most common default list is called a Notice of Default List. Because the lenders have already filed a foreclosure notice – Lis Pendens- at the courthouse, this information is in public records. You could find this information by going to the courthouse. 50% feel it is a better use of time to buy the default list from a list company. 50% feel the data is freshest if they retrieve it themselves Review properties by the price. More expensive properties usually mean more profit and less risk. There is also a Pre-N.O.D. A very large list because so many people are 30, 60, or 90 days behind on payments. They have not received a foreclosure notice yet.

11. As a Realtor Investor • If you have access to MLS search terms, first look where the term short sale appears. It might be under "status modifier" or it might be contained in the marketing comments. • Look for the following terms: • Subject to bank approval. • Pre-foreclosure • Give the bank time to respond. • Preapproved by bank. • Notice of Default • Possible auction

12. As a Realtor Investor As an investor you are looking for attractive properties that families want to live in. Esp. those over leveraged with multiple mortgages. Fixer upper houses that we will resell to an investor. Usually the homeowner must be in default a minimum of 60 days (two payments) to be able to begin the negotiations with the bank.

13. As a Realtor Investor Many times you can negotiate large discounts on the second mortgage. Then bring the first mortgage out of foreclosure. Then rent the property. NEVER lease the property back to the homeowner. Never lease back to the current owner as the court system would be extremely lenient with him

14. Generally a homeowner needs to be ________ days in arrears before negotiations with the banks can begin. 45 90 60 120 B C D A Feedback Question 16.

15. Generally a homeowner needs to be ________ days in arrears before negotiations with the banks can begin. 45 90 60 120 B C D A Feedback Question 16.

16. As a Realtor Before you take the listing or work with Buyers its important to know why Buyers might not want to buy a Short Sale: Some of the reasons why Buyers might not want to buy a Short Sale: Seller Paid Too Much. The home sold for $450,000 a few years ago and is now for sale at $325,000. The Buyer imagines they are getting $125,000 of equity. It usually means the current owner paid too much and there is no equity in the house

17. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Seller Borrowed Too Much. Banks over lent money in on 1st, 2nd mortgages and HELOC’s over the last several years.

18. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Length of Time to Close. It could take anywhere from two weeks to two months to get a response on a purchase offer from a lender. In addition, if two lenders are involved because there are two loans secured to the property, it could take longer to negotiate with the second lender.

19. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Lenders Can Change Conditions. Some lenders reserve the right to renegotiate the terms of the short sale at the last minute. If the market changes, new laws pass or new information crosses the lender's desk, the lender can attempt to change the terms of the contract. Lenders generally have lawyers at their disposal, and ordinary buyers do not.

20. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Lenders Discount Commission. Usually only lenders who have sold loans to Fannie Mae or Freddie Mac are paying traditional real estate commissions to real estate agents. The others usually want a discount. The agents end up doing two to three times the work of a conventional transaction – for less than usual commission. If the Seller agreed to pay your agent a certain percentage under a buyer broker agreement, you/ your Broker could be liable for the difference between what the lender will pay and what your contract stipulates, if the Buyers agent refuses to waive the difference.

21. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Higher Buyer Closing Costs. Lenders rarely will pay for any extras, like a seller would be willing to do, if you/ your Buyer wants any of those extras, you will pay for them yourself. Lenders might refuse to pay for standard seller closing costs such as transfer taxes, etc. Specific inspections you will probably pay out-of-pocket.

22. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Lose Control of Transaction. If you need to close escrow by a specific date it will be difficult. A short sale closing process takes an indefinite amount of time. The seller's lender takes whatever time he wants. If you/ the Buyer are trying to close escrow at the sale of your current home, it might not happen.

23. Barbara Ann was acting as a Realtor Investor. She knew she was getting the short sale property far below market and she planned to rent it. She had been working with the owner and they wanted to rent the home instead of moving. This would be smart move for Investor Realtor Barbara Ann as she wouldn’t have to make any repairs, clean up or have the property vacant. B A TRUE FALSE Poll Question 17.

24. Barbara Ann was acting as a Realtor Investor. She knew she was getting the short sale property far below market and she planned to rent it. She had been working with the owner and they wanted to rent the home instead of moving. This would be smart move for Investor Realtor Barbara Ann as she wouldn’t have to make any repairs, clean up or have the property vacant. B A TRUE FALSE Poll Question 17.

25. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Little Seller Motivation. When the seller discovers that the short sale effect on credit is close to that of a foreclosure, the seller often stops cooperating. Although sellers may qualify to buy another home in 2 years after a short sale versus 5 (with restrictions) on a foreclosure, some have no intention of ever buying another home again.

26. As a Realtor Some of the reasons why Buyers might not want to buy a Short Sale: Excessive Repairs. Your end buyer will not be able to get a lender to loan on any property when the repairs exceed 5% of the appraisal.

27. As a Realtor & Investor DEALS YOU DON’T WANT • The seller will not sign all the documents you present. • The loan requires a short sale to create equity and the seller/debtor wants cash • Spouse involved but not willing to sign disclosure package • Seller is angry or not trusting • House requires many repairs and you plan to sell it to a person who wants to live in it

28. Short sales sound like a great opportunity. However many homeowners stop taking care of the house perhaps months before the foreclosure starts. If the repairs exceed the appraisal by _____ percent the bank generally won’t lend on them. B C D A 2 10 5 20 Feedback Question 18.

29. Short sales sound like a great opportunity. However many homeowners stop taking care of the house perhaps months before the foreclosure starts. If the repairs exceed the appraisal by _____ percent the bank generally won’t lend on them. B C D A 2 10 5 20 Feedback Question 18.

30. As a Realtor & Investor DEALS YOU DON’T WANT • The interior B.P.O. is complete, came in way to high, and you have no compelling reason to convince the lender to do another one • Seller is currently in Chapter 13, 7, or 11 business bankruptcy • Seller demands their attorney be involved through every detail • The subject property is below the median price range and you want to sell it to an end user

31. As a Realtor & Investor DEALS YOU DON’T WANT • Short Sale is in a townhouse or condominium • You determine there is no way to generate a 10% or greater margin • The mortgage is with an undesirable lender known for time-consuming challenges

32. As a Realtor & Investor SHORT SALE HOME RUNS • A single family house $200,000 above your median (most common price) range • A property that needs minimal repairs that will garner a low Brokers Price Opinion • A property with a mortgage that has seasoned a minimum of 12 months since it was written

33. As a Realtor & Investor SHORT SALE HOME RUNS • The same property with multiple mortgages and preferably a 30% second or third mortgage combination • These subordinating mortgages (seconds, thirds, etc.) are institutional and not privately held • Seasoned neighborhood without new construction near or around your prospective short sale deal

34. As a Realtor & Investor SHORT SALE HOME RUNS • Any property that is superior to competitive listings in the eyes of a buyer, i.e. bigger lot, in law apt., bigger rooms, garage great room, views, pool, square footage, building materials and upgrades such as crown moldings, granite, etc. • A property with an appealing location - Downtown, lakefront, high-rise, riverfront

35. When a Realtor Investor is considering a Great Opportunity which of the items below would NOT be a great thing. A single family house $200,000 above your median (most common price) range A property in a new neighborhood, that attracts lots of buyers A property with a mortgage that has seasoned a minimum of 12 months since it was written B C A Feedback Question 19.

36. When a Realtor Investor is considering a Great Opportunity which of the items below would NOT be a great thing. A single family house $200,000 above your median (most common price) range A property in a new neighborhood, that attracts lots of buyers A property with a mortgage that has seasoned a minimum of 12 months since it was written B C A Feedback Question 19.

37. CHAPTER 3 DEALING WITH THE HOMEOWNER As a Realtor As a Investor

38. As a Realtor & Investor At the onset dealing with people in Short Sale situations is usually trouble. Many are in denial or many are just begging for any kind of hope or lifeline they can get. Not the time for any false hope, by the time they contact you or you find them it is nearly always too late

39. As a Realtor & Investor Lenders seldom modify the loan on property for the homeowner. They could offer a mortgage work out plan called a forbearance of mortgage modification. The owner has to prove income etc.. 85% of these fail.

40. As a Realtor & Investor The Owner doesn’t realize that once he stopped paying his mortgage many costs and fees were added to the past due amount. $1000’s of dollars in late fees, penalties and legal fees have all been added to the 3 missing payments. At 3 months they seldom will find the funds to pay it back.

41. Generally if a homeowner starts the short sale before 3 months he can avoid late fees, attorney fees, bank fees. TRUE FALSE B A Poll Question 20.

42. Generally if a homeowner starts the short sale before 3 months he can avoid late fees, attorney fees, bank fees. TRUE FALSE B A Poll Question 20.

43. As a Realtor At this point many owners expect some money for their house. You have to tell them it is illegal for them to receive a penny. Why should a home owner walk away with nothing? • Closure • Dignity “Yes, I sold my house”, not “I lost my house to foreclosure”. • Possibly a smaller loan deficiency sale. As mentioned previously; Deficiency refers to the loss or deficient amount owed that is incurred once the house goes to fore-closure and gets resold as a bank-owned

44. Fannie Mae states they would allow financing 2 years after a short sale. They would not provide financing until 7 years after a foreclosure.

45. As a Realtor As previously discussed, as a Realtor attempting to get the listing you will have three choices: • Take the listing – Negotiate with the bank • Take the listing – The Owner negotiates with the bank • Offer a list of Short Sale experts to the Owner Some states require or expect the Listing agent to be the negotiator with the bank. With sole compensation being the commission. The Seller might also expect the Listing Agent to be the guide through the forest- With sole compensation being the commission.

46. As a Realtor Another alternative would be the Listing Agent submits a list of known 3rd parties who provide usually highly skilled negotiation services for the Seller with the lender. Occasionally the Seller will handle the Doc Package, Lender etc

47. As a Realtor As previously discussed, the Listing Agent has much liability. It is imperative the agent follow State and Federal laws to the letter. • Identify contingent status (when it is approved by the Lender) • Short Sale Addendum • MLS disclaimers Many more

48. As a Realtor Investor At the introduction process you will disclose to the seller that your intentions are to create a discount so you can quickly resell the property for a profit.

49. Fannie Mae has stated that they will lend to a homeowner with in 2 years on a foreclosure situation and 7 years on a short sale situation TRUE FALSE B A Feedback Question 21.

50. Fannie Mae has stated that they will lend to a homeowner with in 2 years on a foreclosure situation and 7 years on a short sale situation TRUE FALSE B A Feedback Question 21.