Are the sellers qualified for a short sale?

One big mistake I see made is real estate investors and agents in this market is they too optimisitic.  Chasing every deal.
That’s a big problem.  Because you end up with lots of busywork and NO MONEY.

Sounds simple, but it isn’t.  But–it will save you a ton of time and grief.

To the point: Always make sure sellers are QUALIFIED for a Short Sale BEFORE taking on the opportunity.  I have filters which I share in my book “Secrets to Short Sale Success.”  They allow me to “Deal or No Deal” an opportunity almost instantly.  And when it IS a deal I jump on it immediately.

It’s important to get the paperwork in order and make sure the agent, the seller are fully engaged in the process.  If it’s really a deal, then it’s a deal worth getting done.

There’s a reason my team and I can get a short sale done quickly.  We don’t take every opportunity that passes our door.  Never have.  We ultra-selective about what deals are doable and what deals are not.

Whether you are an investor or an agent, you should be too.

- Jeff Kaller

PS: My father had a saying:  Person who chases two rabbits, catches none.

I Love to Fly…

Given the demands on my time, it’s rare I can afford the opportunity to get away these days.
But when I was invited to visit my good friend Cameron in Upstate New York, I just couldn’t pass on the opportunity.

Why?

Because Cameron’s got a plane–a plane with floats for landing on the water.

If you’ve never done it, there’s probably nothing more exhilarating than taking off or landing on the water.

I’m told it’s not that much different than taking off on land, but I have to tell you, it sure FEELS different.

Now that I’m out for the weekend, decompressing a bit, I have had a few insights which are actually quite appropriate for our work in real estate…

1. Don’t be afraid to dream. Even right now, when everybody’s pulling in their horns.  Did you kore businesses are started during a recession than at ANY OTHER TIME?  Why?  Because people are more willing to take chances they wouldn’t normally have taken.  There is a risk/reward formula.

2. When flying with Cameron after we took off and we’re in the air, he let me take the controls. What a RUSH!  But you want to know what’s more of a rush?  I had a blinding flash of an idea where I would let you take take the controls in your new real estate investing business while I sat next to you and made sure you were protected and safe.  I can’t wait to build out this service!

3. While we were landing (on the water, mind you) I have to say I was more than a little concerned. But Cameron was steady as a rock.  It being my first time, and after we landed, all I knew is this was COOL and I wanted to do it again.

So what I figure is real estate investing is a lot like flying.  Especially when doing short sales and preforeclosures.

You HAVE to learn from someone who’s experienced and qualified.  You can NOT go it alone.

And you have to be willing to take a chance or a risk.  But it’s a safe, calculated risk–if you’re prepared and trained.

- Jeff Kaller

Market Bottoming Out???

Extremely informative real estate market news today from Wall Street Journal:

http://blogs.wsj.com/economics/2009/06/24/economists-react-new-home-sales-stability-may-be-short-lived/

They say that indicators are leaning towards a market that’s bottoming out.  Frankly, the  way I see it, it’s been bottoming out for the last year.  Based upon new home buying activity, there is a huge GLUT.

Obviously, that’s good news AND bad news, depending upon how you look at it and what your role in the industry is.

If you’re doing short sales, it doesn’t change a thing.  Now’s the perfect time to do deals…  Go for it!

- Jeff Kaller

Should I Pay My Mortgage?

The rich rule over the poor and the borrower is A SERVANT TO THE LENDER (Proverbs 22:7).

Mandatory reading for everyone in this country who has an inkling to want to operate in our “new economic” climate is Financial Piece by Dave Ramsey.

Just last night I was reviewing some startling facts in the book as quoted by consumer reports the typical household debt totals more than $38,000 on average cardholders carry a $8,367 balance on their credit cards month to month paying an average of 18.3 percent interest.  Nearly 80% of all credit cards are at or near their maximum credit limit and almost 40% have taken cash advances from one card to pay another.

Sears charges 21% annual rate and finance income accounts for over 40% of operating income.

Now, lets picture someone facing foreclosure who’s debt to income ratio is 80% meaning debts divided by income = 80%.

Now the question is asked, should I pay my mortgage?  In this case the debtor can’t afford the house and even if they did borrow money from mom or dad to “get by” they might as well have gone on a Bahamas cruise and blown the money or Vegas gambling spree has better odds.

I’ve done countless short sales where I’ve seen debtors completely cash out 20 year savings to pay a mortgage that’s 30% over financed only to watch it go to foreclosure.

Case in point, my partner Todd and I did a short sale with Betty on a six-plex apartment building here in St. Augustine at the beach.  The mortgage was $963,000. By the time we found her she had emptied a $97,000 pension fund to stave off her foreclosure.  At age 69 the lender reminded her how embarrassing it would have been to see her name on the foreclosure list.

To make matters worse…

The retail value was only $350,000 on the building.  At our meeting she began to weep as she told us how she “wanted to do the right thing” and proceed to empty every account to carry her reputation.  Oh, did I mention when the insurance went up she was $3,900 negative cash flow FULLY OCCUPIED.  When payments stopped the tenants got foreclosure notices and moved.

Betty’s failing health, saving depleted, can’t work, has no family to support her and Betty asked me “should I find a way to pay my mortgage?”

I asked her: “is this property serving you or are you a servant to it?”  Obviously we CANNOT and WILL NOT EVER TELL A DEBTOR TO STOP making payments in hopes we can get a short sale.  Always put the debtors interest first, what if that was your grandmother or mom?

Bottom line…

Fannie Mae will issue a mortgage to someone who has a short sale after 24 months.  They will not to someone who has a foreclosure.

It’s time for our country to re-invest themselves you could start by tearing up all your credit cards and using debit cards only.  I’m serious about this, the real answer to all this should be on the tip of your mind “Is this action getting me out of debt or making me a servant to my lender?”

Tell me your thoughts I challenge you to go get Dave Ramsey’s book “Financial Peace Revisited.”  Read it cover to cover, you’ll thank me later.

Why Do Some Short Sales End Badly?

I have been thinking about that news video I sent you yesterday.  It’s kinda gnawing at me.
Here’s what WE do to make sure a short sale ends on a good note:

1. We provide proof of funds.  In other words, we’re serious and it shows…
2. We know how to escalate the file (i.e. move it to upper level management–FAST)…
3. We understand what the bank REALLY needs…

Amazingly, our students, as well as ourselves are typically seeing 8 out of 10 of their deals close–quickly. That’s a far cry from the numbers shown in yesterday’s video… With 50% of all listings short sales, its a simple prerequisite to understand what the lender needs to be able to take your offer.

Here’s the paradigm shift you need to make to be successful:

If the bank/lender doesn’t accept your short sale offer, it’s NOT their fault. Don’t blame them.  About 90% of the time, they are just following the rules. The reason is the person submitting is not aligning the offer to match value of the property. It’s this ONE concept that has changed how my students and protege’s now get 80% acceptance. It’s based upon my proprietary BPO to OFFER alignment formula–thereby creating an offer the bank simply can’t refuse…. This is simple–but it’s actually missed by 99% of all people that have not been trained these distinctions.

Bottom line: I can train you how to do this.

- Jeff Kaller