whatever you do DO NOT record the deed if the owner has already deeded you the house. This will kill the deal if the banks decide to check - which they do more often than not just to make sure the sellers name on the contract and the one on the deed match. Wait till you hear from the bank and go to the closing before recording it at the courthouse.
Getting the deed right away is simply good idea. It helps the seller to remember that if you can help them with a SS, that they have already signed title over to you. I always get the deed (notorized), and file it until after I get an acceptance letter from the bank. The day I send them the proceeds is that day that I record the deed.
Some investors say to record the deed right away to prevent any other leins (from the seller) to cloud the title, but my best experience has been to file it until I get an acceptance letter.
If you get all of the paper work you need right out of the gate, it is easier to seal the transaction in the end.
This begs the question, how much of a pain in the butt is it when the lender doesn't grant SS approval when you have the deed? What steps do you take to walk away?
One of the first things to remember is to caution the homeowner that the bank may or may not agree to reduce the debt (via a SS). If you prep the owners in advance, if it doesnt work out in the end, you are not such a bad person to them. Give the sellers an approximate timeline of how long the bank may take to make a decision, and if they do agree to the SS, what the next step is for both you and the seller.
If the lender doesnt grant the SS, just do the right thing and notify the owner that the bank was not interested in working things out, and there is nothing more that you can do. Give them the good news though that they can continue to live in the house until the Auction, and even then the will still have to be evicted. Let them know how much time they have.
If you did not record the deed in advance(which I dont), and the bank rejects your SS, that is the end of it. You simply wash your hands and go on to the next deal Hope that helps!
Great comments BAMZ, guys, but if I may notice that this forum could be more educative and productive have someone posted the (hypotetical) structure of the deal we are currently disscusing.
Be glad to help since you are after education and not someones hard work for free again: A lot of newbies are making this harder than it needs to be,
1. Find a preforeclosure where the house has no or little equity.
2 Get it tied up either by sales contract or deed at a lower price than the loan balance.
3. Submit short sales package and wait.
4. If bank approves ss then go to closing with a bag of them green papers slips and you have bought a house.
5. If bank says no way then kindly notify seller that you do not want to continue and walk away hopefully not spending any money.
If this is whant you wanted I hope it helps. Let the forum know if you have other questions. Some banks are quick to respond and are trying to sell these properties before they go to the sale and some are slow and never even bother to respond. I hope if you do one that you get an easy one that will make you some bread. Keep in mind too that the banks do not want to give these properties away and are protecting their shareholders etc and if they see equity between what you are asking them to take and what they think the FMV of the property is they will not discount their loan balance.
This type of SS works like "Up side down"
equity in the car sells The only thing I do not understand how the property can be in negativ equity stadium if the market steadily increses throughout the country(?)
if the loan id new, why would the bank accept SS when they practically didn't make any money..
What kind of profit is expected in suc transaction expresed in % of the total value of the deal?
---------------------------------------------------
Nice to meet you cz333,
Do you mind telling us some details:
How is the market doing in X_____ where you are Is it hot seller's or balanced? This metter because it shows the level of motivation for the seller.
What was owed on the property when you aproached the HO?
What did you ofer to the bank and what they accepted it?
What kind of forms did you use?
omega1
I never SS like this but would like to see the doc's if you can PM me.
I asked a lot's of question I hope someone will have the kno... sorry, patience to respond[ Edited by omega1 on Date 12/22/2003 ]
Omega: I'm not a short sale expert, but here is my PERSONAL take on it. So gurus feel free to correct me.
Example:
I'm an investor and I put out 100k dollars out on the market to loan on real estate. A servicing company services the loan. I collect payment for 2 years and make about 14k in interest and receive back about 2k in principal. The house goes into foreclosure and 4 months later the homeowner owes me about 4 payments plus fees, etc etc. It’s been two years so the loan balance is $97,895.00. They won't pay. The house will be auctioned off. It will cost me more big dollars for auction. Plus no one is going to buy this house with no equity at the auction. Oh great!, I will have to sell it, fix it up, blah blah blah.
But oh no here come omega with a short sale offer of: oh boy 60k, I lose 40k, but so what I already made 14k on interest the last two years, plus Omega says it needs 15k in repairs. Ouch! And guess what else? I have 5 other loans for 100k that are good performing loans so I’m still making positive cash. This is just one bad loan. Plus I don’t have to tell my friends I made a bad loan because it embarrassing. What if my bankers found out I can’t even keep my own affair in line.
Now add 6 zero to this scenario and you see why banks discount. Banks make an enormous amount of money on loans even with bad loans.
Remember your discounting the paper not the house.
whatever you do DO NOT record the deed if the owner has already deeded you the house. This will kill the deal if the banks decide to check - which they do more often than not just to make sure the sellers name on the contract and the one on the deed match. Wait till you hear from the bank and go to the closing before recording it at the courthouse.
Hi redcanoeproperties,
Getting the deed right away is simply good idea. It helps the seller to remember that if you can help them with a SS, that they have already signed title over to you. I always get the deed (notorized), and file it until after I get an acceptance letter from the bank. The day I send them the proceeds is that day that I record the deed.
Some investors say to record the deed right away to prevent any other leins (from the seller) to cloud the title, but my best experience has been to file it until I get an acceptance letter.
If you get all of the paper work you need right out of the gate, it is easier to seal the transaction in the end.
Best of Success!
BAMZ
BAMZ,
This begs the question, how much of a pain in the butt is it when the lender doesn't grant SS approval when you have the deed? What steps do you take to walk away?
Thanks,
Bginvestor
Hi Bginvestor,
One of the first things to remember is to caution the homeowner that the bank may or may not agree to reduce the debt (via a SS). If you prep the owners in advance, if it doesnt work out in the end, you are not such a bad person to them. Give the sellers an approximate timeline of how long the bank may take to make a decision, and if they do agree to the SS, what the next step is for both you and the seller.
If the lender doesnt grant the SS, just do the right thing and notify the owner that the bank was not interested in working things out, and there is nothing more that you can do. Give them the good news though that they can continue to live in the house until the Auction, and even then the will still have to be evicted. Let them know how much time they have.
If you did not record the deed in advance(which I dont), and the bank rejects your SS, that is the end of it. You simply wash your hands and go on to the next deal Hope that helps!
Best of Success!
BAMZ
Great comments BAMZ, guys, but if I may notice that this forum could be more educative and productive have someone posted the (hypotetical) structure of the deal we are currently disscusing.
Examples rules!
omega1
Be glad to help since you are after education and not someones hard work for free again: A lot of newbies are making this harder than it needs to be,
1. Find a preforeclosure where the house has no or little equity.
2 Get it tied up either by sales contract or deed at a lower price than the loan balance.
3. Submit short sales package and wait.
4. If bank approves ss then go to closing with a bag of them green papers slips and you have bought a house.
5. If bank says no way then kindly notify seller that you do not want to continue and walk away hopefully not spending any money.
If this is whant you wanted I hope it helps. Let the forum know if you have other questions. Some banks are quick to respond and are trying to sell these properties before they go to the sale and some are slow and never even bother to respond. I hope if you do one that you get an easy one that will make you some bread. Keep in mind too that the banks do not want to give these properties away and are protecting their shareholders etc and if they see equity between what you are asking them to take and what they think the FMV of the property is they will not discount their loan balance.
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
What is the minimum amount of time it takes to get a short sale acceptance? Is it worth a try 3 weeks prior to the sale?
Three weeks yes. The larger the bank, the more red tape. I've negotiated with a small bank in one day... some of the larger banks can take 4-6 weeks.
This type of SS works like "Up side down"
The only thing I do not understand how the property can be in negativ equity stadium if the market steadily increses throughout the country(?)
Is it hot seller's or balanced? This metter because it shows the level of motivation for the seller.
[ Edited by omega1 on Date 12/22/2003 ]
equity in the car sells
if the loan id new, why would the bank accept SS when they practically didn't make any money..
What kind of profit is expected in suc transaction expresed in % of the total value of the deal?
---------------------------------------------------
Nice to meet you cz333,
Do you mind telling us some details:
How is the market doing in X_____ where you are
What was owed on the property when you aproached the HO?
What did you ofer to the bank and what they accepted it?
What kind of forms did you use?
omega1
I never SS like this but would like to see the doc's if you can PM me.
I asked a lot's of question I hope someone will have the kno... sorry, patience to respond
Nice to meet you cz333,
Is it hot seller's or balanced? This metter because it shows the level of motivation for the seller.
Do you mind telling us some details:
How is the market doing in X_____ where you are
What was owed on the property when you aproached the HO?
What did you ofer to the bank and what they accepted it?
What kind of forms did you use?
omega1
I never SS like this but would like to see the doc's if you can PM me.
Omega: I'm not a short sale expert, but here is my PERSONAL take on it. So gurus feel free to correct me.
Example:
I'm an investor and I put out 100k dollars out on the market to loan on real estate. A servicing company services the loan. I collect payment for 2 years and make about 14k in interest and receive back about 2k in principal. The house goes into foreclosure and 4 months later the homeowner owes me about 4 payments plus fees, etc etc. It’s been two years so the loan balance is $97,895.00. They won't pay. The house will be auctioned off. It will cost me more big dollars for auction. Plus no one is going to buy this house with no equity at the auction. Oh great!, I will have to sell it, fix it up, blah blah blah.
But oh no here come omega with a short sale offer of: oh boy 60k, I lose 40k, but so what I already made 14k on interest the last two years, plus Omega says it needs 15k in repairs. Ouch! And guess what else? I have 5 other loans for 100k that are good performing loans so I’m still making positive cash. This is just one bad loan. Plus I don’t have to tell my friends I made a bad loan because it embarrassing. What if my bankers found out I can’t even keep my own affair in line.
Now add 6 zero to this scenario and you see why banks discount. Banks make an enormous amount of money on loans even with bad loans.
Remember your discounting the paper not the house.