Want more success with your short sale deals? Then read on.
One thing that has really helped my staff and me in doing short sales is working with the right lenders. Early on, we started keeping track of the different lenders on a spreadsheet. We noted which lenders were accepting our short sale offers and which ones were rejecting our offers. After doing short sales for a few months, we noticed an obvious trend. There were 13 lenders that were approving our short sale deals left and right. And there were 8 lenders that were rejecting our short sale offers, no matter how good they were.
So grab your pen and write this down. Because I’m about to give you an excellent tip. This tip will prevent you from getting tired, frustrated, and broke when doing short sale deals. The tip is to work with the lenders that will almost always approve your short sale deals and RUN from the ones that won’t.
I learned this the hard way when I got greedy on one deal in particular. The lender was Option One. The house was worth about $225,000. And the seller owed about $200,000. The house needed a lot of work, so I knew it would be easy to convince the mortgage company that the value was extremely low. And then to get the short sale accepted. There would be a LOT of repairs to point out.
Now normally, the mortgage company sends out a BPO to look at the property at their own expense. You, the investor, do not have to pay for that. But Option One told me that the only way I would be able to proceed with a short sale was if I personally called and paid for an appraiser to appraise the property!
I though they were nuts and I said, well then just foreclose on it. But later that night I got greedy. I started thinking. Man, I know I could get a low appraisal on that property, and I could use it to buy this $225,000 property for $120,000 or less. And then turn around and make at least $35,000 by wholesaling it to another investor … and even more if I rehabbed and re-sold it myself.
So I called them back the next day and said, “OK, I’ll do it. I’ll pay for the appraisal.” So I did. I called the appraiser that day and arranged for the appraisal. And just as I had planned, the appraisal came back extremely low. It was at $130,000, which would still leave plenty of room for profits if the bank accepted that amount instead of the full payoff.
But guess what! Even though it seemed like they would accept my offer – my offer was only $10,000 less than the appraisal – Option One said No to the offer and refused to accept any offers that were less than the full payoff. I was furious! I said, then why’d you have me send out an appraiser if you weren’t even going to consider a short sale? She said that her supervisor would have to call me back about that. But of course, no call, which was expected. The house got foreclosed on the following week.
That was a $300 loss for me, but I gained a valuable lesson. Some lenders will do nothing but waste your time. And your money if you let them, like I did. You want to spend your time working on short sales with lenders that actually APPROVE short sale deals at a high rate. And lenders that actually pay for the BPOs themselves, like they’re supposed to.
Over time, our list of preferred and “black listed” lenders became very important to us. I have never shared this list of lenders with anyone. But I’m sharing this list of 13 approved lenders and 8 lenders that will ruin your life in the Advanced Short Sale System. Let’s just say that Option One is “black listed”. But they’re not even the worst one. There are 7 others that are just as bad or worse. This list is an absolute “must have” unless you want to spend over a year compiling this list on your own as you bang your head up against the wall.
Go Here to learn more about getting your hands on the Advanced Short Sale System, which includes this list of lenders as a component.
Until next time, Happy (and profitable) investing!
Doug Smith
President
myHouseDeals.com