Private Real Estate Funding Tips & Techniques

So what is a short sale?

With the increase in foreclosures lately you may have heard the term “short sale” and wondered what it was. A short sale is when the lender will accept less than the full amount due on a mortgage when a property is sold. Usually, the lender will accept the short sale to avoid the time and expense of a foreclosure.

When a borrower is in default on a mortgage they not only owe the back payments but also may owe late fees, property inspection fees, attorney fees, etc. This can add up quickly to eat up all the equity the borrower had in the property. If the borrower is unable to bring the account current the lender will then foreclose on the property. With a foreclosure, the lender can lose up to 40% of the mortgage amount because of the extra costs involved with foreclosing on a property: attorney fees, court costs, lost interest, eviction costs, property maintenance costs, and selling costs. Foreclosing on a property can also take up to two years in some states. Therefore, it is sometimes in the best interest of the lender to accept the short sale.

It also can be in the best interest of the borrower. They will not have to endure the time and stress of a foreclosure and their credit may not be as adversely affected as it would with a foreclosure. It is quicker and easier and does not subject the borrower to the embarrassment of a foreclosure.

How does it work?

The first thing the borrower should do when they can no longer afford a property is to contact the lender immediately. The last thing a lender wants to do is foreclose on the property. Lenders typically have departments that work with people who are behind on their payments to resolve the situation. If you cannot resolve the default with the lender, and you want to see if they will accept a short sale, they will direct you to the department that handles short sales.

The lender will usually require the borrower to submit a lot of information to the lender in order to consider the short sale. The information required may include:
• Income documentation such as W-2s and pay check stubs to verify the borrowers’ income.
• Bank statements to verify the borrowers’ assets
• Hardship letter – this letter will describe for the lender the reasons the borrowers are in the financial position they are in and will ask the lender to accept the short sale. Borrowers should make this letter sound as sad as possible and back up the story with any documentation you may have such as medical bills, etc.
• Fair market value for the property – depending on the lender they may require an appraisal or may accept an opinion from a local Realtor know as a Comparative Market Analysis (CMA).
• Preliminary proceeds sheet from the sale of the property. This will show the proceeds of the sale of the property after the mortgage is paid off and all other closing costs and fees are paid. This will be negative in the case of the short sale and this negative amount is the amount of the shortage.
• Listing agreement and purchase agreement when they are available.

When the lender reviews all of this they may or may not approve the short sale. If they do not approve the short sale they will proceed with the foreclosure. If they do agree to the short sale you will close on the sale of your property and the lender will take the loss.

So, is the borrower off the hook?

Not necessarily. The lender still has options to try to collect this shortage. As a condition of the short sale the lender may require the borrower to sign a note to repay the shortage. They may also file a collection or a judgment for the amount of the shortage. This is something that an attorney with expertise in this area of real estate needs to be consulted.

Also, the IRS may come after the borrowers for income taxes on the amount of the shortage. If the shortage was forgiven, the lender will report the shortage as income to the IRS and the IRS will collect taxes on this amount. Again, for the specifics on this please consult a tax or real estate professional.

Thinking about the short sale process for your home?..Let us help!
Call: Hayden and Associates LLC, 480-837-3387 The Short Sale Specialists.

2009 is going to be one heck of a year. and for a lot of people, not in a good way. But despite everything that’s going on, the important thing to keep in mind is this: The only economy that really matters is YOUR economy If the economy takes a nosedive by 30%, that just means you have to improve your own results by 30%. Now, it’s highly unlikely that you’re going to be able to get a 30% raise at your job in a very short period of time. The only way to do this is by owning your own business.

And there has never been a better time to be an entrepreneur (specifically an Real Estate entrepreneur) than right now. IF you know how to take advantage of it. If you’ve ever studied economics or past events, you know that money doesn’t just DISAPPEAR during a recession (or even a DEpression). It has to go somewhere. The trick, obviously, is to find out where it’s flowing and to position yourself in front of it.
If there’s one thing history has proven over and over again it’s that…There is MORE opportunity when things are uncertain than there is when things are “normal” That’s why there are always people who actually come out AHEAD as a result of economic downturns.

And here’s another big “secret”: This isn’t the first recession we’ve ever experienced and it certainly won’t be the last. It’s not a question of IF things will bounce back, it’s just a matter of WHEN.
The only real question is, where will you be left standing when the dust settles?

Here’s how to prosper during the coming months and years: Get Paid Helping Others

Now you are able to use the Private Funds Program for your own real estate flipping transactions. You are provided a Proof of Funds Letter for each of your Flip Transactions, even if you don’t need to use our Private Funds Program.  You are taught through easy to learn online Video Courses, exactly how to flip Short Sale and REO property using our Private Funds Program using no credit or money of your own. 

Listen to Sara’s Experience using our funds http://weprovidethecash.com/sara.php?id=clhayden

Join our nationwide group of investors @ www.wesupplythecash4u.com for details and overviews about our funding programs.

We teach you how to find and contract with a prequalified buyer as well as providing you the Proof of Funds and the Cash to buy the short sale from the Bank.

Cost of Funds is 2% plus $500 flat fee all paid from your profits at closing. Buy a home worth $200,000 in a short sale for $100,000 and resale for $150,000. You keep $50,000 minus 2% (2,000+$500 flat fee). You pay for the use of the money from your profits at closing, meaning no cash out of your pocket to use the funds.

Here’s how it works: Line up a shortsale purchase (we teach you how to find unlimited numbers of shortsale deals), use our method to line up a buyer, then use our investor’s funds to buy the home and flip it to your ready buyer. No credit needed on your part since the buyer’s loan at closing pays off our private investor. This is a No Cash / No Credit transaction on your part.

Visit: www.wesupplythecash.com for all the details

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• New Funding Program for Short Sales and REO’s Nationwide

Image via Wikipedia

Find out how this critical policy change on the use of the 700 Billion bailout funds just put our members of ( Home Sellers Assist Program ) in the drivers seat for the next 3-5 years.

The Fed (Paulson) announced today that they have changed their mind on using the funds to buy bad assets from banks. That means they will NOT buy up the banks and lender’s bad loans.
This means that banks will have to continue to SHORT SALE their non-paying home loans to investors like you and me.

Us our investor funds to buy these homes at 50 cents on the dollar and simultaneously resale them at 80% or more for an instant $20,000 - $40,000 or more using no money or credit of your own.

Find out more @ www.wesupplythecash.com

Making money with this program is like shooting fish in a barrel.

Don’t miss this extended opportunity in the current Real Estate market.

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