short sale idea ( need some help)
By nyckid27Since you couldn't make it...
By Karli Grace, Millionaire In Training, MMMChallenge.comSpent some time reflecting recently on the energizing and amazing 3 ½-days Rainmaker Summit and 1-day Global Ambassador Program presented a couple of weeks ago by Bill Walsh’s Powerteam International. The days were long but well worth every minute. The group of entrepreneurial business owners participating was of high caliber. The presenters and coaches were tops! This was a personal and business development educational event that also built community and great connections. When you find yourself in the midst of excellence it is good to share a bit about the experience. Since you couldn’t make it… I’m highlighting portions of the event for your consideration.
Many readers may have experienced similar events, but many may not have attended such a personal and business development coaching session. This kind of training should be a life-long occurrence; it serves the seasoned as well as the new entrepreneur. Just being appraised of what was presented may serve as a benchmark of your awareness of the tried and true as well as of current trends.
The focus was on unlocking your passion and becoming inspired about your true personal and business ‘vision’. Clarifying your ‘vision’ and then your ‘why’ begins the process of empowerment which ignites the power to pull you to your biggest goals, living your dreams. The ‘why’ is always what keeps you motivated when the temptation is to quit. If you haven’t identified your vision, your core foundation for being, it is essential to do so. Taking the time to really discern your ‘vision, why, passion’, will make such a difference in all that you do in life. Those currently participating in the MMM Challenge application process with the Real Deal Community are being asked to look at this very issue. If you have already built your current business with a clear vision and why, it might be a good time to take stock and see if you are really on track. Are you congruent with what you say and believe versus what you do?
Another key focus of the event was on having solid business plans and systems. Planning must include the systems that will help to keep you moving forward consistently. Systems are critical to a thriving business. For example, the McDonald’s system is instrumental in its international success. Success or failure often hinges on the quality of systems that have been put into place, or lack thereof. Systems serve to make your processes repeatable at the same level of quality time after time. Small business owners, like so many of those in real estate investing, often have to do all aspects of the business themselves. This solo operation may lead to inefficient systems which can make the business cumbersome and sluggish. It really takes a team! Real estate investing is a business and you should be looking at your venture as such. Realizing early on that you are starting a business that requires planning, development, and the implementation of effective, supportive systems, can help you avoid serious and expensive mistakes down the road. Many investors that I have run into don’t really view investing as a business and often think that it suffices to just go buy a house and flip it. And, for some that works, for awhile. Now there are lots of gurus out there that say they have the ‘magic bullet’ for a winning system. One pops up about every other week; they take turns. Once you know you have the need for systems, or need to update yours, be sure to do your due diligence about which system you build, use or buy. Thinking though your business model is crucial to supporting your success.
And, here it was again. Every time I turn around (not only at Rainmaker), a consistently repeated part of the product development and marketing plan that seems to be getting extra emphasis is value, value and more added value. Value has always been part of the business proposition but ‘value’ is truly becoming a key way of distinguishing yourself from the pack, from all the clutter out there. Sometimes the added value is a small thing but can make an impression that keeps bringing the customer back, and referring others. What are you doing to make yourself memorable? How do you differentiate your business? Would your customers refer you to their family and friends? Why?
It is important to keep your train on the track once you start the journey. Given that you clarified the vision of where you are going and why, and developed your plan and systems, it is necessary to measure your results so that corrections can be made that further your business success. Since there are only 86,400 seconds in a day, time organization and accountability really assist you in staying on track. Is this aspect covered in your business plan and systems? Staying focused and on target will make a significant difference as you build, maintain or grow your business. Master mind groups, accountability partners, as well systems benchmarks/metrics, can all help you stay on track. If you aren’t using a great time management system, then it is time to decide which vehicle will be one that you can work with effectively. Then use it religiously!
Do you have a brand? Once you know who you are as a business, and what you are offering, be it wholesale products, commercial JVs, short sales, notes buying, tax liens, or any range of those products/services, it is so very important to build your brand. You guessed it, differentiate yourself from others, or join your competition and work together as affiliates who help one another grow their related businesses. Having a brand isn’t enough. You must advertise that brand. Online and offline presence is essential. Your social media brand will need to be promoted. Syndication is one way to connect your activity throughout the social media world and drive traffic to your website or Word Press blog. If you are using Word Press as your interactive website, you probably won’t need an informational and/or store website. And now, Face Book is moving to the use of the ‘i-frame’ that will allow you to move your website on to your Fan Page. Be sure you have a clear brand and a unique selling proposition. If you aren’t sure how to do that, there are many who excel in that service who would be more than ready to serve you. Then again, you can take the time to research and study branding and then review-copy-alter the best of the best concepts that you find online and in other publications.
Offline marketing has years of proven strategies and tactics, though some of those are shifting with the move toward online marketing. Sheila Stewart, an executive business coach with a proven track record and years of experience in marketing and advertising, provided a plethora of ideas about marketing strategy, advertising and sales. It was clear that the integration of offline, online, and mobile ways of finding, and then meeting and exceeding customer needs, should be the integrated thrust for today’s business marketing. Have you identified your strategies in this arena? There are many pieces to fit together but the sooner you start to understand the pieces, how they fit together, and how they serve you, the better off you will be. Finding virtual assistants (VA) to help put some of these tactics into place can be fairly inexpensive. However, it sure helps to have a basic understanding of what is happening with online and mobile marketing in order to hire and manage your VA’s effectively. And, be sure to have a seamless approach that integrates the best marketing strategies and methods to serve your targeted market segment(s).
Austin William Walsh, a 19 year old entrepreneur with his own business since age 16, covered the role of Face Book in social media and how one must truly understand the sales funnel, how to drive traffic, and how to utilize social media as a part of that funnel. Social media is continually evolving as we see with Face Book out-pacing Google. Overall, there was a substantial focus on building and using Face Book Fan Pages for business, and how to build and monetize your brand. Probably an understatement, but doing business online will be essential in the near future, if it’s not already, especially in real estate endeavors. If social media is an area that you aren’t utilizing or just starting to look at, it is definitely worth your time to familiarize yourself with the dynamics of this marketing medium and make it a part of your business plan.
There is definitely a major trend toward the use of short videos in all online presence. Get your flip-cam and start to explore how to use and edit. Videos are already beating out ‘text’ advertising. A new emerging company, MOJO, headed by Ira Rosen out of Scottsdale, is positioned to capture the mobile market through the use of video that can readily be dropped directly into the text message being sent out to the mobile world of i-Pads, Droids, Blackberry’s, etc. MOJO knows that video email utilization, currently not on the market, will only grow and provide business owners the capacity to have direct access to existing and potential customers. This mode of direct customer contact will result in a higher percentage of text messages opened due to the embedded videos. Video has a much higher capture rate than text. The industry is definitely moving toward mobile strategies. Soon we’ll all be making our own 30 second spots and connecting directly with the world!
One other note of interest about MOJO was my conversation with the principal, Ira Goldman. He is an older entrepreneur who told me he didn’t even know how to use the computer three years ago. Ira connected with a young man in his twenties, Cory Sanchez, who had a technical background and a great idea. This connection led Ira and Cory to building a primarily ‘twenty-something’ staff to support a million dollar idea. Ira and Cory were definitely on fire about the video product they are bringing to the market. The real point to share here is that there is a great need and value to pair skills and wisdom regardless of age. If you think you can’t jump into the online world, then you are right. You can’t. If you take action, pursue ongoing education, connect with the right partners, VA’s, etc., then YOU CAN! I am a firm believer that you can learn new things if you are open to it. It is a right, privilege and choice to learn new things; it is a choice to stay open to possibility. Who of you are holding the next greatest idea, invention or service? Are you open to the realm of possibility of pursuing joint ventures that are collaborative and mutually supportive? Can you be an old dog that can learn new tricks? Can you be a young buck open to the wisdom and experience of those older than you? Merge the best of both worlds and see what you can come up with that will serve the planet in new ways.
Speaking of blending ages in business, as a result of this Summit I now have a new master mind partner who is in middle school. He attended the entire event, sat taking notes on his laptop and already has a business building personalized backgrounds for Face Book Fan Pages, LinkedIN, Twitter and YouTube. Got to love the spirit! He will definitely provide great insight into anything that I am working on, and it will be easy to support his entrepreneurial ventures. As a former teacher, a Dean of a middle school, and a professor, I must say I was impressed. And, as for college student and entrepreneur Austin Walsh, whom I mentioned earlier, he already makes a six-figure income and speaks internationally. He noted that when he is goes to a party, which he loves, he is busy looking around the room to see how he might, from a positive perspective, monetize the situation. Austin is acutely tuned into cause marketing as well and really comes from his heart in his dealings with people. How many of you are thinking that way? How many of you are taking action? I absolutely love to see resourceful young people who are not totally programmed for the ‘moo-baa’ herd mentality of life. Are you involving your children, nephews and nieces, in your business in real ways? Do they have a sense of all that goes into your business? Have they participated in some way? Do they get to see you win? Fail? Do you encourage their entrepreneurial spirit?
As a side-note away from the Summit, while on the topic of role modeling for and encouraging entrepreneurial spirit in youth, I’ll share how one of my accountability partners involves his ten year old daughter. This investor does a hearty business with gut rehabs and buy and holds. His daughter goes along when he goes to work on houses and gets to see what happens to ‘ugly houses’ that eventually transform into ‘desirable’ housing. She has helped to sweep and knock away cobwebs, helping her dad in small ways. She also comes along to our accountability meetings and does her homework, but still is exposed to the process of our group holding each other accountable. She even saved her own money to buy her first laptop computer. She’s not being rushed into overly mature ways of being, but is learning about business, work ethic, the value of money and her dad’s role as a businessman. I daresay she will be prepared to take on life as a successful entrepreneur at an early age if that is her choice. It is my hope that you are modeling entrepreneurial behavior for any young person in your life.
Ross Goldberg, an SEO expert and author, also presented his perspective on creating web-based traffic. He supported the use of content based links as a viable way to increase your website ranking despite other alleged guru’s suggesting other methods were now more effective. Ross noted a number of tactics useful to drive traffic to your website, including: social media marketing, Digg and other similar sites, RSS feeds, blogs/directories, videos, press releases, article and e-book marketing, squeeze pages, affiliate marketing, and web directories links. Don’t know what all of those tactics entail? Check the web and start to understand the pieces and which will work for you. No matter what the marketing presenter’s background throughout the event, the point of commonality was their emphasis on how to achieve effective online marketing. Do you think that you might want to pay attention to this aspect of your business? Yes, or yes?!
The topic of Google AdWords was presented by Perry Marshall, Internet entrepreneur and the most quoted authority in the world on the subject of Google AdWords and pay-per-click advertising. Perry shared information on how to increase your click through rate and reduce the cost of your advertising budget on Google. He also offered split testing techniques. Entrepreneur Scott Rewick, the One Hundred Million Dollar Man, continued the internet discussion sharing his many year’s of wisdom on low-cost media buying strategies that attract new customers. All the presenters were great and filled their presentations with lots of useful content. It is good to learn from those who have been very successfully involved in the industry for years.
And, not to leave out real estate, Marco Koslowski, shared his Luxury Home Sales program. He deals with properties $700,000 and higher. Interestingly enough most of these homes that are currently being auctioned off are going to international buyers. America is on sale! Marco is such a positive and animated presenter who is the embodiment of a rags to riches story, now owning eleven different business and ready to launch a new clothing line. Marco persisted with hard work, failing before winning, and developing systems and fine tuning them, all recurrent themes for those who eventually make it to the top. There isn’t an overnight get rich quick elixir. You have to get involved, get your hands dirty and your mind fired up, and just do it!
No way have I touched on all the topics covered and the incredible team of presenters at the Rainmaker Summit. Topics such as asset protection, building business credit, and more, was also covered. The long weekend’s value for me was ‘priceless’. The networking and connections alone were worth the time. In order to keep your self fresh, on top of trends, aware of new methods of doing business, refreshing that which you already know, and further challenging yourself to grow, invest in yourself. Attending such an event has the potential to open your creative juices, unwrap your potential, create new partnerships, and help you get un-stuck if that is your situation.
I invite you to identify a seminar or workshop, such as the Rainmaker Summit, that you feel is worthy of your time and funding and go for it. It’s time to enrich your self to richness! Since you weren’t there, I hope that you have gleaned a snap shot of what I consider quality continuing education, an invitation to the ongoing process of achieving personal growth and greatness. See your ‘vision’. Support it with your ‘why’. Build your plan and systems. Be accountable. And, passionately take action KNOWING you can do it! YOU CAN! Now go do it!
As they say in Chicago, there’s always next year!
By Karli Grace, Millionaire In Training, MMMChallenge.com2010’s MMM Challenge process brought me very close to becoming one of the MMM Challenge team members. Though I was in the running until the very end, the mentorship didn’t manifest. At that time there was one dynamic team that was destined to come together for very specific reasons, apparent or not. The team chosen was absolutely perfect. 2011 will see that same dynamic in play. And as they say in Chicago, there’s always next year! For me, 2011 is the world series!
There is no doubt that the MMM Challenge application process itself is worth its weight in gold. And I applaud all those who are called to participate in 2011. Throughout the application period I did meet and connect with a number of really great people, many of whom went on to actively work with Rick Melero and Danny Welsh. It was also my great pleasure to meet with Danny Welsh a couple of times when he came to Chicago to gather with Midwestern Challenge members. Following and connecting with Rick, Danny and other MMM Challenge members on social media has been fun and inspiring. I am grateful for being a part of the Real Deal community that feels more like a family. Rick, Danny, and the Challenge members are the Real Deal.
With the 2010 Challenge over, I went onto the waiting list for 2011. Being on the waiting list didn’t mean that I didn’t need to do anything but be a lady in waiting. Oh, no! The focus remained the same as before, to continue with my real estate business and internet marketing. Looking back over the year, it was an exceptionally full one. At times progress was made, other times there were frustrating situations. Focus, persistence, and action however remained the mantra.
I had started to blog about short sales on the Real Deal site when a minor surgery interrupted the process for several months. And with all the everyday shifting patterns in the lending arena that impacted real estate, I felt out of integrity to post further information that might be misleading or incomplete due. It is clear that the shifts and issues of, and created by, the financial industry continue to play havoc with the real estate industry and the economy. Hence investor’s portfolio building strategies have had to shift. The ultimate challenge for many investors has been having access to cash buyers or private funding, and that continues to this day. Major lenders are flagging that the second quarter of 2011 will see a tremendous number of bank owned (REO) properties coming on the market. There will likely be more short sales as well. Those with the funding in place will be looking at inventory that won’t stop, definitely a buyers market. Unfortunately, many communities may be looking at new devasted neighborhoods.
One issue that had seemed like a block in my business was having a proof of funds (POF) letter so that multiple offers could be made. Finding deals wasn’t the problem. But while having remedied the POF situation, and having access to transactional funding, the next problem was a shortage of end buyers for the numerous offers I made over the summer. Identifying potential cash buyers and private money lenders continues to be an active part of my business focus. Currently I am developing presentation materials to be used for private passive/equity lenders.
For my short sale business I am involved with Harris University for ongoing education, marketing strategies, and insights into the lender world. They work closely with Titanium Solutions which is a national company that I do work with as a Realtor. I have assisted home owners in the home retention-loan modification process, working with all the major lenders.
Through a virtual site I bought a duplex in Indianapolis that was sold to me as being ‘flippable’. The property will cash flow but it hasn’t proven to be a fast flip despite much local and national advertising. Since the property is in need of rehab, I am in the process of identifying funding to cover rehab costs. The flip has turned into a buy and hold for now. The experience of buying out of State has been quite interesting and has resulted in the development of a team of Realtors, wholesalers, and contractors in Indy.
Over the year I have continued to re-visit my business plan and study different real estate strategies. There is a group of four of us who meet regularly to support one another and share materials, information and strategies with the intention of joint venturing on deals. We also attend a couple of the local REIAs for education and networking.
Another person that I communicate with weekly is a California investor, Realtor – Eco-broker and commercial agent also involved in mobile home parks. This relationship has provided me with insights about mobile home parks; green, sustainable building; and, commercial real estate. We also share social media and internet information.
Ongoing education and personal development is important to me and so I continue to attend seminars and network with other like-minded people. Over the year I have attended events focused on real estate, business development and marketing, motivation, internet business:
- Commercial Real Estate – Realtor class (Mar 2010)
- Net Income Workshop-Gateway-Ron LeGrand (Apr 24, 2010-Chicago)
- Facebook & Twitter Hands On - Realtor class (Apr 20-2010-Tinley Park)
- Insider’s Edge Real Estate Conference- Bill Rancic & Dean Graziosi’s (May 29, 2010-Oak Brook)
- Insider’s Edge Real Estate Workshop- Bill Rancic & Dean Graziosi’s (Jun-2010)
- Internet business seminar (Jun-2010)
- Celebration of Real Estate Investor Knowledge (3-day Aug 2010- Chicago) WCRT REIA
- The Ultimate Entrepreneur Success Seminar- Glazer-Kennedy (Aug 14, 2010 Rolling Meadows)
- Get Motivated Business Seminar (Sep 2010-United Center – Chicago)
- Financial Success 2010- James Smith (Dec 3-5, 2010 Rosemont, Chicago)
- Chicago Recession Buster Small Business Conference- Glazer-Kennedy (Jan 21-22,2011-Shamburg)
I am also scheduled to attend:
- Powerteam International Rainmaker Summit Weekend-Bill Walsh (Mar 4-6 Shamburg)
- Powerteam International Ambassador’s Training-Bill Walsh ( Mar 6-7 Shamburg)
- Success Blueprint – Raymond Aaron (Mar 27-28 Chicago)
- Millionaire Mindset – T Harv Eker (Apr 1-3 Chicago)
- Residual Mastery – Bill Walsh (Sep)
Numerous webinars I listened to include:
- How To Use Teleseminars to Sell Tons of Books/Products and Make Hefty Profits – Alex Mandossian
- Social Media Marketing - Ross Hair – 2– 3hr events
- Commercial Real Estate - Rick Melero
- Marketing Q&As - Danny Welsh
- Kindle e-books
I will always continue to learn, hone skill sets, stay motivated, meet wonderful new people, and move forward. Life is meant to be lived.
At this time I am participating in a 90-day internet challenge and starting to set up Wordpress for blogging. Studying anything that has to do with social networking is a passion. Social media is necessary for anyone who plans to do any kind of business in the future, not to mention its application to passive residual online opportunities. In preparation for my continually evolving business I have set up two Face Book fan pages. They will be in place when I am ready to flesh them out and do an official launch. Building my personal branding is in process. I also continue to build my social media contacts, especially real estate investors and other related professionals. I’ve built a network on the Real Deal Community site and other real estate investor sites. I also host the Illinois group site on Real Deal; it is my hope to mobilize this site so that it truly meets the need of those who are members.
In September I had the opportunity to complete a public speaking seminar with Les Brown, international motivational speaker, and will do further work with him in the future. Speaking, writing and teaching/coaching is one area that I am re-visiting. This will serve my real estate interests, and a range of other areas of my personal and professional expertise.
Mentoring with a quality mentor is essential. All successful individuals have had a mentor and a master mind group. Currently I am working with Raymond Aaron for personal and business development. And, I meet every three weeks with an accountability group. As far as real estate goes I have had a mentor in the past, but the work I did under his guidance was expensive but not what I would call a quality experience. However, having mentors like Rick Melero and Danny Welsh who are exceptional, really care about your progress, and bring you into their team is the kind of mentorship that is a value proposition. Interning, learning by doing, is the best. The internship-mentorship is an ideal learning venue and serves everyone involved. As you give, so you receive. The MMM Challenge also offers the opportunity to connect with like-minded individuals across the country, providing the potential for life-long relationships and possible business transactions/partnerships. It is this level of coaching that I feel will help take my business to the next level. I know that being a MMM Challenge team member will help me pull together all the pieces I have in place and solidify them. I welcome this possibility!
This past year has been filled with change and challenges. As one views the national and world news it is evident that the “times are a changing”. But whatever happens, I know that 2011 is filled with the greatest opportunity in history. So I continue to:
- be aware of the changes to the best of my ability and adapt as need be;
- strive for excellence;
- work from integrity, honesty, ethics and a spiritual base;
- plan, implement, maintain and evaluate;
- create and problem solve;
- enhance my skills and knowledge;
- build great relationships;
- and, provide service with added value.
Right now I am pumped! Just reviewing my past year affirms that I haven’t been a lady in waiting. Being a candidate for the MMM Challenge mentor-internship program again is exhilarating. I am ready for the challenge! I can feel the passion! It’s time to play ball! It's time for a new team to suit up. There is a world series at stake here. After all, 2011 is “next” year.
What Should You Expect from a Short Sale?
By ChristyIn today’s difficult real estate market, sometimes a short sale is the best option for a homeowner. You’ve already tried a loan modification and that didn’t work for you. Or you need to move but can’t afford to sell the house because you owe more than it’s worth. And your financial state is such that you can’t bring money to the table to sell the house… or you can’t do the necessary repairs and maintenance anymore, you need to sell your house for less than you owe on it and get the bank to accept that amount as payment in full.
Sometimes you won’t qualify for a short sale. For instance, if the house is worth less than the mortgage, the bank is unlikely to accept less than what you owe on it because you can sell the house and cover the mortgage. Or if you have a ton of money in your bank accounts, the mortgage holder is not going to look kindly on your application for a short sale. They will expect you to come up with the difference to sell it.
So, if you likely qualify for a short sale, here is what you can expect from the process.
1. It will take time. Short sales take longer than regular sales because we have to negotiate with the bank to get them to accept less than you owe on the house. Some banks work much more quickly than others. However, many are notorious for taking months to even assign a processor to the file.
2. You will have to prove your financial hardship to the bank. The bank basically requests all the documentation that they wanted when you got your loan – only this time, you are proving to them that you can’t afford it anymore.
3. Once the bank decides that your financial hardship qualifies you to participate in the short sale process, they will order a broker’s price opinion or an appraisal on your house. They want to be sure that the house is actually worth less than what you owe on it.
4. You might need to continue to give the bank updated documentation and they might send you other documents to sign during the process.
5. The bank will either accept the offer, reject the offer or make a counter offer on the sales contract. You need to have a sales contract on your house in order to start the short sales negotiation process. Because it can take so long, it’s often a good idea to work with an investor. People who don’t understand the process, like first time homebuyers will often back out because of the time.
6. If the offer is not accepted, you must negotiate with the bank and with the buyer (unless you are working with an investor who will take care of all this) to get their prices aligned.
7. When a short sale is accepted by the bank, your buyer must close within 30 days of the acceptance letter. Today, with a retail buyer this can be challenging. Tight credit markets have made it much more difficult for people to find loans.
8. If you are in the foreclosure process, you must keep on top of the bank to ensure that your house does not get sold on the sheriff’s steps while you are trying to work out a short sale.
When you are working with a Realtor to get a short sale accepted, there is about a 5% acceptance rate. Realtors can’t start the short sale process until they have a contract on the house. Buyer brokers do not like to show houses that are in the process of a short sale because they know that they are likely to lose a buyer who is ready to go if that buyer has to wait for the short sale to be processed. And if they lose buyers, they can’t feed their own families. And Realtors don’t necessarily enjoy spending hours on the phone with banks negotiating a short sale when they could go sell the house down the street and make the same money for a lot less effort. Very few Realtors are actually trained to work short sales because, frankly, it’s just not as profitable to them as working normal house sales.
When you work with an investor who specializes in short sales, that investor will put your house under contract right away. They will work with you to get the paperwork package together for the bank. They, or someone on their team who specializes in short sale negotiations, will spend hours on the phone with banks checking up and following up on your file. They will also do their best to ensure that if you are in foreclosure your house does not get sold before the short sale is completed. When the short sale is accepted, the investor already has money lined up to purchase your house so it will not fall out of contract.
So, your short sale is much more likely to be completed if you are working with an investor who specializes in short sales, than if you are working with a Realtor who would really rather just be able to list the house and find a buyer without having to deal with the headaches that come with short sales.
Christina Mellott
Millionaire In Training, MMMChallenge.com
www.housingheadaches.com
Moving through the pre-foreclosure process timeline…
By Karli Grace, Millionaire In Training, MMMChallenge.comNOTE: The following overview is not definitive and, generally, reviews the State of Illinois pre-foreclosure process. The writer is not a lawyer or professionally versed as an interpreter of the law, nor an accountant. The “bank/lender” may also denote the “mortgage servicer” who is handling the account for the party/investor which actually holds the mortgage papers.
Anyone working with short sales must become well versed in the many aspects of the business. A starting point is the pre-foreclosure time line. Whether you are pursuing short sales or just are interested in better understanding the process, the following information is presented to acquaint you with the generalities of the pre-foreclosure time line. This presentation is based upon the time line as exists in Illinois, a judicial state, which has one of the longer pre-foreclosure time frames. It is essential to understand the pre-foreclosure process time line of the state in which you are dealing as it varies by state. With the volume of pre-foreclosures being handled in today’s market, the time line is often considerably stretched in terms of moving from start to finish. The following information should serve to exemplify the pre-foreclosure time line.
When visiting any pre-foreclosure homeowners it is necessary to frame the foreclosure process and time line for them so that they can identify where they are in the foreclosure process. All too often homeowners have quickly vacated their home because they feared being put out on the street with all their belongings. The owners didn’t realize that there were options to consider and some time to deal with the situation at hand, be that staying in the home or moving on.
The official foreclosure action typically isn’t filed until after a homeowner has missed two to three payments (30-90 days). When payments have been missed the homeowner initially receives late payment notices which are then followed by calls from the collections division. The lawsuit begins when it is filed at the courthouse but doesn’t commence until the homeowner is served with the “complaint” and other papers. The homeowner is served the papers by a process server, a sheriff’s deputy, or, sometimes via certified mail. Someone usually comes to the homeowner’s door and delivers the papers which have a date stamped on them. That date is “key” as it represents the beginning of the pre-foreclosure time line for the homeowner. When the lawsuit papers are served the homeowner receives the “complaint” (for lack of payment) and a copy of the promissory note and the mortgage, both signed by the homeowner/borrower.
The bank/lender likes to move quickly giving the homeowner 20-28 days to “answer the complaint”. The homeowner is requested to appear before a judge on a designated date. It is in the best interest for a homeowner to answer the complaint, if not in person then in writing. When appearing before the judge the homeowner will be asked to bring the loan current, including late and attorney fees. Attorney fees begin to accumulate once the foreclosure is filed. When the homeowners are unable to make the payment demanded the judge relays to them that a “default judgment” will be entered in approximately 60 days.
In Illinois the court also provides the homeowner with basic information about the foreclosure process, offers home retention counseling, and lists options available. Many homeowners I’ve talked with were still not sure they understood the information given to them at the court house; I’d conjecture that they really didn’t understand it, were in denial, or were so overwhelmed that it didn’t sink in. Other homeowners I’ve dealt with didn’t bother to make an appearance in court to answer the complaint because they didn’t understand the papers served, knew they didn’t have the money, and/or were paralyzed with fear and chose to just do nothing. Some homeowners use a lawyer that makes sure that the complaint is answered appropriately. If a written answer to the foreclosure lawsuit is utilized it is filed with the court; copies are also sent to the attorney processing the lawsuit for the bank/lender.
The “default judgment” will be set by the bank/lender’s attorney and the homeowner is notified of the sale date by mail. The sale date is also published in a local newspaper. Some lenders have stayed relatively close to the “90 days following the serving of the summons” for suit. But, as previously noted, there has been so much going on with banks/lenders these days that this “90 day” window has been on hold for much longer in many cases. Even a date to process the default judgment can get pushed back on the court docket for a few weeks or a couple of months. It is always important to know where you are in the time line of the pre-foreclosure process, for your sake and the homeowners. The bank/lender attorney and the loss mitigation department can update the status of the property as needed with either the homeowner or authorized third party.
Once the sale date has been set the homeowner knows how long they are able to stay in the house if they haven’t already moved out. If you are the one processing a short sale, you know how much time is left to complete a sale. There is always the possibility that a sheriff’s sale can be interrupted. If you are working with the bank/lender’s loss mitigation department on an offer that is already assigned to a negotiator there is a chance they will delay the sale. However, sometimes, even with a great offer that has been on the table for months waiting for a close date, the lender will allow a property to go to sale. At other times an offer comes in just before the sale date and the sale is delayed even when there isn’t an assigned loss mitigation negotiator. There are other methods that can also stop a sale which will not be covered in this discourse. The sale date is typically about 1-2 months after the default judgment has been entered.
At the sheriff’s sale/auction bids are taken on the property. The bank/lender will have set a minimal bid knowing what they want to net. If there isn’t a buyer willing to bid what the bank/lender wants they take the property back, resuming control of the property. It is at this time it becomes a bank owned property, REO (real estate owned). The actual “confirmation of sale” doesn’t take place for a couple of weeks; this is the actual consummation and transfer of ownership. When sold, the homeowner is given 30 days before an eviction takes place. When the bank/lender takes the property back they let the homeowner, or tenant, know when they need to be out of the house by mail (one month, sometimes two). If the homeowner has already moved on, the property may be immediately assigned to a Realtor who will secure the house for the lender (often before the confirmation of sale). It usually takes about two months before an REO will come back on the market as an MLS listing.
The redemption period expires approximately 7 days prior to the judicial sale. The redemption period is seven (7) months from the date of service or three months (3) after the judgment is entered (whichever is later). During this time the homeowner can bring the loan current and stop the foreclosure process. Note that many states have redemption periods that extend past the sale date of the property.
Illinois does have a longer process than most states, approximately 12 months long. I’ve suggested to homeowners in pre-foreclosure that this longer period of time is both a blessing and a boon as it provides a longer time to deal with the property yet keeps them (the homeowner) in limbo and under stress longer. The pre-foreclosure process is complicated at times and it depends on which bank/lender is involved as to how quickly the time line flows.
It is imperative that you know the foreclosure process and time line for the state in which you are planning to work short sales. In the many states that have shorter time lines it necessary to work quickly and apply different strategies to get the short sale completed within the given time frame. Once the pre-foreclosure time line is understood, you should also be clear about the options available to homeowners; these options will be covered subsequently.
Sure, I Can Negotiate My Own Short Sales, but Why Should I?
By ChristyAnd once you find the loss mitigation representative who is working your file, you have to actually, gulp, negotiate! Once you figure out what to say to them, you have to wait until someone else approves the file or they come back with a counter-offer, or just refuse you all together. Then what do you do?
Why are you dealing with this headache by yourself?
Let's see, there are several reasons that I can think of:
1. You think that you can do it better than anyone else.
2. You've been doing a business like a one man show, thinking that you have to do everything in your business.
3. You want to do it yourself so you can train someone else to do it.
4. You see all these people who offer to negotiate short sales, but have to buy an $1100 program, then give them 50% of the profits!
5. You don't know who is reliable and who is just starting out and has no experience, but they talk a good line.
There is certainly some reason in most of these arguments, except #1, unless you are already very experienced in doing negotiations. However, for the vast majority of real estate investors, you are going to get the most value from your time by hiring out the negotiations and focusing on building an actual business, rather than being a one man show. All being a one man show will get you is a lot of frustration and the feeling that you are constantly running on a hamster wheel, getting nowhere fast. Perhaps if you only want to do a deal a month or less and you have a lot of spare time on your hands, then maybe it would be good to do your own negotiations.
So, how can I either find or hire a good negotiator? First of all, you want someone who is experienced at negotiating! Maybe they are one of those fired loss mitigators that I mentioned earlier. You can hire someone for part of the profit or you can pay them hourly. Or, there are many, many services out there that will do your short sales for a fee.
The one I am using charges a minimum of $4,000 to do the short sale negotiations or 2% of the sales price. If I can create an average $28,000 spread, the fee is well worth it. They have connections, methodology and time -- and I can concentrate on bringing in more business (which by the way, does not consist of marketing directly to sellers -- people bring me sellers)
To find your own negotiation firm do these things: Ask them for references. See what they are doing. Check out their website. Check out their literature. It will soon become apparent who is a joker and who is actually going to be a good bet. Do they have requirements that make sense according to what you know about short sale packages? After all, you want to hire someone who is going to help your homeowners and make you some money.
Is it worth it for me to pay over a thousand dollars to get into someone's negotiating program? Honestly, I have to say that it depends... if you know nothing about short sales, some of the programs out there will provide you some excellent training and access to experts in the field. They are very expensive -- giving up half of your profits is a steep price to pay. In the example above where I talked about a $28,000 spread, these people who claim to be helping you would get $14,000, rather than the $4,000 that my negotiators get.
Now, go get yourself a negotiator!
Christy Mellott,
Millionaire In Training, mmmchallenge.com
The Road to Short Sales…
By Karli Grace, Millionaire In Training, MMMChallenge.comStarting a short sale business had only fleetingly crossed my mind until I met a man who would become my broker. I’d heard a number of speakers address the topic of short sales and was actually signed up for a three day workshop on the topic when a great opportunity presented itself. I was attending an investor half-day workshop covering strategies on single-family homes. During the experience-sharing introductory session I noted my pre-foreclosure work in San DiegoChicago suburbs. The following day I received a call from Steve, the man who had sat next to me at the workshop, asking if I would like to join him in the short sale business. Steve had six plus years of experience in this area. (NOTE: showing up, education and networking = opportunity) This was an exciting possibility!
Steve had become a Realtor to work with short sales, and then became a broker to make it easier to specialize in this area. He started by assisting a family member with a short sale. When people at his church found out Steve could facilitate a short sale, he soon had a couple of other homeowners with distressed properties to assist. Word of mouth was the initial and unintentional medium at play in the growth of his business, later followed by a direct mail strategy. Experience had been Steve’s best teacher and eventually lead to his being able to replace his “job” and devote full time energy to the short sale business. He went on to establish a team of short sale professionals to efficiently process short sales with lenders, including an attorney and a title company. When Steve and I met he was interested in expanding his brokerage coverage and liked that I was already pursuing homeowners in pre-foreclosure. He offered to mentor me; I’d just need to become a Realtor. My short sale adventure was launched.
The mentorship started immediately, even as I signed up for Realtor classes and other workshops on the short sale strategy. I went on client calls with Steve to observe, become familiar with the presentation, and the paperwork that was necessary. I do believe and profess that learning by doing is very powerful, oft the best teacher. Having the theory and knowledge is important but it must be applied until it is “owned”. The short sale business has many facets and each must be understood and successfully implemented; there is a lot to learn. So let’s get started! Let’s explore the world of pre-foreclosures and short sales over a period of weeks.
Before looking at the current market and all the inherent facets of short sales, let me first present some of the general terminology used in short sales and the pre-foreclosure process. As we continue, more terminology will surface.
Short Sale
A short sale is the sale of a home when sales proceeds do not fully pay off the existing loan(s) and the lender accepts a discounted payoff to fully satisfy the loan. The lender virtually pays all the sales costs, including commissions, escrow and title fees and sometimes repair cost. The home gets sold; the loan(s) are paid off to avoid foreclosure, auction or bankruptcy.
REO (www.foreclosureuniversity.com)
The term REO (real estate owned) is used to refer to a piece of real estate (property) owned by a bank. An REO is different from a foreclosure property in the sense that the bank has already tried to sell it at a foreclosure auction and has not been successful in getting bids, and following this, the bank then became the owner of the property because the property was not bid on. As expected, the bank is not interested in keeping the REO for any longer than it has to, therefore making it a good opportunity for an investor. However, it must be remembered that every REO need not necessarily be a good deal, but in general, it has been seen that when it comes to an REO there usually is a lot of money waiting to be made.
Short sales become an option for a homeowner, primarily, due the foreclosure process. So someone dealing with short sales must also understand the foreclosure laws of the State in which they do business. There are two types of foreclosures, the non-judicial and the judicial foreclosure. It is important to know which process your State follows. A link that allows you to see each State’s foreclosure laws is www.foreclosurelaw.org, United Stateswww.all-foreclosure.com, Judicial and Non Judicial: foreclosure laws. The following definitions are referenced from
Types of Foreclosures
Non-judicial
Non-judicial foreclosures are processed without court intervention, with the requirements of the foreclosure established by state statutes. When a loan default occurs, the homeowner will be mailed a default letter, and in many states, a Notice of Default will be recorded at approximately the same time. If the homeowner does not cure the default, a Notice of Sale will be mailed to the homeowner, posted in public places, recorded at the county recorder’s office, and published in area legal publication. After the legally required time period has expired, a public auction will be held, with the highest bidder becoming the owner of the property, subject to their receipt and recordation of the deed. Auctions of non-judicial foreclosures will generally require cash, or cash equivalent either at the sale, or very shortly thereafter.
It is important to note that each non-judicial foreclosure state has different procedures. Some do not require a Notice of Default, but start with a Notice of Sale. Others require only the publication of the Notice of Sale to announce the sale, with no direct owner notification required.
Judicial
Judicial foreclosures are processed through the courts, beginning with the lender filing a complaint and recording a notice of lis pendens (suit pending). The complaint will state what the debt is, and why the default should allow the lender to foreclose and take the property given as security. The homeowner will be served notice of the complaint, either by mailing, direct service, or publication of the notice, and will have the opportunity to be heard before the court. If the court finds the debt valid, and in default, it will issue a judgment for the total amount owed, including the costs of the foreclosure process. After the judgment has been entered, a writ will be issued by the court authorizing a sheriff’s sale. The sheriff’s sale is an auction, open to anyone, and is held in a public place, which can range from in front of the courthouse steps, to in front of the property being auctioned. Sheriff’s sales will require either cash to be paid at the time of sale, or a substantial deposit, with the balance paid from later that same day up to 30 days after the sale. Check your local procedures carefully. At the end of the auction, the highest bidder will be the owner of the property, subject to the court’s confirmation of the sale. After the court has confirmed the sale, a sheriff’s deed will be prepared and delivered to the highest bidder, when that deed is recorded, the highest bidder is the owner of the property.
Each State does have specific laws. Some work with both judicial and non-judicial foreclosures, others allow one or the other type. The length of the foreclosure process also varies by State. For instance, the consent foreclosure also applies to my home State of Illinois which also has one of the longest time lines from the time of default to the actual sheriff’s sale.
Consent Foreclosure
A consent foreclosure will vest all then borrower’s right and title in the lender free and clear of all claims(except liens of the U.S. Government) including rights of reinstatement and redemption of any junior lien holder who was properly joined and who failed to object. Upon objection, the court may hear such evidence as required and enter an order that title vests subject to the lien, or if the junior lien holder pays the balance on the mortgage plus any additional interest, within 20 days of the entry of a court order commanding the same, then the junior lien holder can redeem the property. The final judgment in a consent foreclosure must recite the lender’s waiver of right to any personal judgment for a deficiency and will bar a deficiency against not only the borrower, but any co-borrower or other person who is liable for the mortgage.
If you are hoping to work in short
sales, or already do, it is essential that you know what is
required by the law of the State in which you are doing
transactions.
As most State’s are judicial, or a combination of judicial and
non-judicial, I’ll focus on the judicial foreclosure as I
continue. The State
of Illinois has
a judicial foreclosure law and will serve as the
platform for my subsequent presentation of the foreclosure time
line which illustrates the working parts therein.
Definition: lis pendens
(lease pen -denz) (1) Latin for "a suit pending." The term may
refer to any pending lawsuit. (2) A written notice that a lawsuit
has been filed concerning real estate, involving either the title
to the property or a claimed ownership interest in it. The notice
is usually filed in the county land records office. Recording a
lis pendens alerts a potential pruchaser or lender that the
property's title is in question, which makes the property
less attractive to a buyer or lender. After the notice is filed,
anyone who nevertheless purchases the land or property described
in the notice takes it subject to the ultimate decision of the
lawsuit. (http://www.nolo.com/dictionary/lis-pendens-term.html)
Now that you have some
intitial information about short sales, join me on this "road to
short sales" series. The short sale startegy is one that
will be well worth adding to your arsenal of real estate
strategies for years to come. My next blog will further
address the judicial foreclosure process. Until then... to
your success!
Live Real Estate Mentorship with Rick Melero
By Rick Melero, Commercial Investor, Real Estate Mentor, Member of HIS Board of Advisor
Tell us how
your experience with your mentor was:
The experience was amazing. Rick is an excellent and knowledgeable Real estate investor and entrepreneur with amazing training techniques.
What did you learn during your training?:
Short sales, joint ventures, wholesales, commercial rental, lease/option, body language, negotiation, credit improvement, contracts, and sales techniques.
Can you now see yourself investing with confidence using the strategies learned? Why?:
With my previous experiences and the knowledge absorbed from Rick’s training there’s no excuses and no reason why not to succeed and invest with confidence.
What can we do to improve our mentorships?:
Right now everything was perfect.
Antonio S New York
These 3 day on-sight mentorships are so much fun!!!
Rick Melero
www.RealDealCommunity.com
www.HisRealEstateNetwork.com/commercial
Investing in Luxury Short Sales
By Philip J. Sherman, Millionaire in Training, MMMChallenge.com1) These are properties that are at least $500,000.
2) Make contact with Real Estate Brokerages that cater to these clientele so that you can get some of these deals rolling in.
3) The Rich are also having a hard time paying their Mortgages.
An example would Mr. Nicholas Cage having a house foreclosed on in New Orleans. How about about Stephen Baldwin in New York. In 2008, Mr. Trump himself saved Ed McMahon from going through the same thing before he past away last year.
4) The Banks want to unload these properties the quickest. The more bad loans a bank has, the more they have to hold back in savings that their unable to loan. They are required to hold back $7 dollars for every loan in default or non-performing loan that is on their books. Since these properties cost more, they have to hold back. So they will be willing to quickly cut a good deal and get this type of short sale approved more quickly.
See you at the Top
Why I Want to Master these Niches
By Philip J. Sherman, Millionaire in Training, MMMChallenge.com1) Because of the huge montary potential of these niches.
2) I can help others in a significant way.
3) With these particular you tend to put in no more work than with other niches in Real Estate Investing and yet the profits are bigger.
Philip J. Sherman
Billionaire in Training
MMMChallenge.com
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