Short Issue, Short Question????????
ok, i have been pretty successful in my shorts (thanks SSP).. but im having a problem showing the lenders a cost analysis of a foreclosure cost..what does it cost a lender to foreclose??..i know it's not a cookie cutter answer, such as "it costs chase manhatten 5500 plus attorney fees to foreclose"..i do thinkk its informative to the lender that i know how muchit will set the company back to foreclose..i also think that with big lenders that the left hand doesnt necesarily know what the right is thinking..i want this part of my proposal..any insight?? SSP??
regards-pat
just thought i would ask again....SSP , ya know i expected an answer..its evident from your perspective and knowledge that those of us that purchased your short sale that i would get some type of response, that it is, or maybe not, that im mportant ,, for my shorts, i have found that only your basics are relevant, there is much more more to a short than what you expreses to us on TCI..i never asked for an explanation to my question, but, have found that your non-response, an indication to much of us that only know the basics....however, we have probably made money from your primer and i can only be happy from the simple life..i will seek an informative person from now on...i have been involve in REI for close to twenty years, just thought someone who bought would get somethin backkkkkkkkkkk.... this is not the first time..thanks alot......
regards-pat
Hello,
Just a suggestion, but you might try sending SSP a private message, since he/she may not be looking at every single posting...
I agree - SSP's posting are extremely helpful!
Patricia, you have reached the point that you suspect that a cost benefit analysis could be helpful in support of your ss proposals. Be careful what you wish for, because it could confirm to the mortgagee that accepting less is NOT in their best financial interest.
I've found that most (not all) TCI readers don't properly qualify their short sale candidates... and pursue transactions that have little chance at success. Then they wonder why.
"i do thinkk its informative to the lender that i know how muchit will set the company back to foreclose..i "
The lender has a very good idea what it will cost (under ideal conditions) for them to foreclose, acquire, hold, and liquidate. Their decision makers are both educated in risk management, and skilled negotiators. Their companies spend hundreds of thousands of dollars on sophisticated financial software specific to the jurisdiction of the property. They know that, on average, a lender spends between $10,000 and $14,000 to foreclose a mortgage, and push the property to Sale. Of course, that number is relative to the jurisdiction, and subject to market conditions.
But their info doesn't consider the variables... the property's physical condition, present market conditions, the all important BACKLOG in the foreclosure process, and the INTENT of the distressed mortgagor.
By supplying that information in your ss proposal and subsequent negotiations (negotiation includes the transfer of information) you try to accomplish two things... the first is that the foreclosure process will be more time consuming and expensive than their 'model' suggests... and 2) the property's value is less than they believe it to be. The information that you supply (actual market data including DOM, sold prices vs. asking prices) plus estimates to restore the subject to marketability will then be factored into the equation.
I'm not suggesting that you spend many thousands of dollars in consulting fees (TUITION) to sit with an attorney, a CPA, and a real estate expert to devise and tweek your own CBA (as I did). But you can if you want to.
Glean as much info as you can as you work your way thru the loss mit food chain. Info that includes the number of REOs that result from defaults... how long on average the process takes, how much, on average, would an uncontested foreclosure cost? Are these costs recoverable by PMI... Oh, by the way, as long as we are talking, does this loan have PMI and if so, may I have the policy number for my records... And who owns this loan? Is it a recourse or non recourse loan? And, ballpark (in your opinion) what would it take to get this loan off your books?
Have I answered your question? Probably not to your satisfaction. Have I pointed you in the right direction? I hope so.
PS. Only provide info that will stand up to scrutiny, and that you can defend.... because it will be challenged.
If you aren't sure how to conduct and present a CBA, perhaps you should use the shotgun approach... and speak in generalities instead of specifics.
SSP,
Excellent post! Thanks
Bginvestor
OK Newbie again. I really want to understand this stuff this constant use of acronyms makes this new language even more difficult for me. What is DOM and CBA?Quote:
On 2004-02-20 09:53, TheShortSalePro wrote:
Patricia, you have reached the point that you suspect that a cost benefit analysis could be helpful in support of your ss proposals. Be careful what you wish for, because it could confirm to the mortgagee that accepting less is NOT in their best financial interest.
I've found that most (not all) TCI readers don't properly qualify their short sale candidates... and pursue transactions that have little chance at success. Then they wonder why.
"i do thinkk its informative to the lender that i know how muchit will set the company back to foreclose..i "
The lender has a very good idea what it will cost (under ideal conditions) for them to foreclose, acquire, hold, and liquidate. Their decision makers are both educated in risk management, and skilled negotiators. Their companies spend hundreds of thousands of dollars on sophisticated financial software specific to the jurisdiction of the property. They know that, on average, a lender spends between $10,000 and $14,000 to foreclose a mortgage, and push the property to Sale. Of course, that number is relative to the jurisdiction, and subject to market conditions.
But their info doesn't consider the variables... the property's physical condition, present market conditions, the all important BACKLOG in the foreclosure process, and the INTENT of the distressed mortgagor.
By supplying that information in your ss proposal and subsequent negotiations (negotiation includes the transfer of information) you try to accomplish two things... the first is that the foreclosure process will be more time consuming and expensive than their 'model' suggests... and 2) the property's value is less than they believe it to be. The information that you supply (actual market data including DOM, sold prices vs. asking prices) plus estimates to restore the subject to marketability will then be factored into the equation.
I'm not suggesting that you spend many thousands of dollars in consulting fees (TUITION) to sit with an attorney, a CPA, and a real estate expert to devise and tweek your own CBA (as I did). But you can if you want to.
Glean as much info as you can as you work your way thru the loss mit food chain. Info that includes the number of REOs that result from defaults... how long on average the process takes, how much, on average, would an uncontested foreclosure cost? Are these costs recoverable by PMI... Oh, by the way, as long as we are talking, does this loan have PMI and if so, may I have the policy number for my records... And who owns this loan? Is it a recourse or non recourse loan? And, ballpark (in your opinion) what would it take to get this loan off your books?
Have I answered your question? Probably not to your satisfaction. Have I pointed you in the right direction? I hope so.
PS. Only provide info that will stand up to scrutiny, and that you can defend.... because it will be challenged.
If you aren't sure how to conduct and present a CBA, perhaps you should use the shotgun approach... and speak in generalities instead of specifics.
Newbie again...not good at acronyms. What is DOM and CBA? Thanks Jana
DOM = Days on Market
I don't know about CBA... yet!
DOM = days on market
CBA = cost benefit analysis
What kind of experience are you guys having dealing with chase bank?
Thanks SSP, my CBA' just seems to be lacking, and this last one was about to send me to the porch of Washington Mutual..I have been told that my proposal/presentations are professional and complete and my pre-candidates/candidates are running about an 85% success rate..I appreciate your primer and apologize for my hot response..You answered my question, good luck..
regards-pat
This was a good thread. Gee, only an 85% success rate? That's terrific.
The intent of the Primer was not to provide a step by step, boilerplate manual... although it does articulate an insider's theory, and what's essential in a successful Proposal... because we know that this is a dynamic niche market... Adaptability is crucial. It's intent was to provide the ability to prequalify the candidate early on in the process.... and to be able to structure a realistic short proposal so as not to waste your time in pursuit of an ill-conceived short... when other acqusiition techniques might be more applicable.
Patricia, the Primer is being revised, reorganized, and expanded for release in mid-2004. If you've previously purchased the soft cover version of the Primer, I'll send to you, as a courtesy, the revised primer in an E-file.
Thanks SSP, your primer is just that, a primer to perfect definition..
One aspect of your manual that I feel I must promote, is that if you do have a marginal deal, that putting together an informative professionally bound and well researched proposal gets you much further in the door then just submitting the lenders required package..
I have thought long and hard about an in-depth CBA submission as part of my proposal and have decided against this to certain lenders in specific geographic regions and at certain times of the year.. I do believe there is a place for a good CBA on a case by case basis..
I await your revised edition and thank you for your offer..
Regards-Patricc(male)
Whats the best course to learn and start doing short sales?
ShortSalespro course or Legrands course!
Best Riches,
Jeffrey Adam
[addsig]
patricc68,
What it cost lender is not only the amount of $$ they will have to write the check for to foreclosure trastee and RE broker who will dispose it, but there is also a complex chain of consequences that happens when a lender loses it's ability to use it's primary tool - MONEY because their business IS renting, selling and lending money and the none performing asset on their portfolio is not only looking bad in the eyes of the board and investors but is really bad business that all bank loves to avoid.
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For experienced REI primer should by default be better because it eliminates the fluff necessary for beginners. What I think TheShortSalePro should do is email us the copy of his e-book/primer so we can write the educated review and periodically advice newbies on the purchase when the moment allows.
Just a thought. [ Edited by omega1 on Date 02/22/2004 ]
davese,
Based on what I heard and many people say, Jeff Kaller course is the most comprehensive one on the market. Ron Legrand attempted a one day version but many say it is not as detailed and useful as the original Kaller's one that you can see on his site: http://www.resultsnow.com/p2139.html
In addition to that, since I am NOT specializing in this field, I suggest that the best person to answer this question would be TheShortSelPro, since she/he(?) had to start somewhere too.
Here is an article covering popular question: "Are All Guru's Alike?", which I found interesting enough to suggest you read it yourself:
http://www.foreclosures.com/forecast/ff_May03/default.asp?topic=marketing
Thanks Omega,
I will look at the product and artical. I dont want to specialize in SS's but I do want to be able to do them and know when I should do them when necessary.
In the one year I have started in REI I have bought 1 hud house, had it leased optioned and then they moved back to some other state after 5 months (had 2k up front and 160.00 per month PCF) then my oldest brother needed a place so I am renting it to him for just under 100.00 PCF.
I have assigned one contract for 10K and thats it. I have been in a rut ever since. Dont know where, what or how to do it anymore.
So maybe learning another way will prod me to figure something out.
A local mentor would be great but I cant seem to even buy one on this site