1. When submitting an application to your bank you will have to write a handwritten hardship letter. 2. If they ask you to sign a contract have it reviewed by an attorney. 3. 2 recent bank statements 4. 2 recent pay stubs 5. Copy of last years tax bill 6. HOA Bill 7. The most recent listing agreement if the house was listed to sell. Let me try and simplify what these companies try and do.
They will have you make up a hand written hardship letter even if there is no hardship. They will tell you to make it very personal and emotional.
They also will tell you that they have a cash buyer for your property. What they wont tell you is that, what they are really going to do is take your house, list it at a reduced price and try and find a buyer while the paper work is submitted to the bank. On the contract they will list their company as the purchasing buyer and they will ask you to sign a contract with no price and say that they will negotiate the price with the bank.
They will try and do a double close. What this means is that if they locate a buyer, the price that they have negotiated with the bank will be less than the buyer will pay therefore they profit the difference.
For arguments sake, say they have negotiated with the bank a price $100 that the bank will accept as the selling price. They will sell the house for as much as they can above the $100 price. This will all take place as soon as you sign the listing agreement with one of these short sales company. They get to profit the difference of what they have negotiated with the bank and what the buyer will pay.
What you need to understand that it is quite possible that the bank will give u a 1099 for the balance that they lose from a short sale and this will increase taxes you owe to the IRS. So these slick companies who you are led to believe are helping you are really not. Usually the first offer they make to the bank is around 50-60% of what you owe. Some banks who are overweight in real estate may accept those numbers leaving a hefty balance owed the bank. You must insist if you are going to do one of these is to include in your contract that the bank NOT HOLD YOU responsible or give u a 1099 for the difference.
For you to get the most value out of your home, list your house with an experienced short sale Realtor who will get you the maximized amount and negotiate with the banks for your benefit not to maximize profit for his company. The higher amount the Realtor could get from an interested buyer will help you in the long run if you are upside down on the loan. If the bank issues you a 1099 you want to make it for the least amount as possible.
This decision is a very important decision.
If you decide to use one of these companies find out how much money they will be making off the sale of your house at closing. Don't sign a listing agreement with them and watch they wont buy your house.
Why should one of these companies make money off of you and than you will owe the bank more when the house sells if he bank does not release you.
Make sure they put a purchase price in the contract and don't leave it blank.
Don't mislead the banks with phony hardship letters. If you cant make the payments than thats what you use. As always be very careful when giving out your personal information like social security numbers, bank statements, pay stubs, date of birth. Know the person or company and research and check to see if they are a legitimate company.
I was genuinely appalled at the misinformation and outright lies that he was feeding the frenzied crowd of about 100 or so innocent folks. He fed them the bull like he was an evangelist preacher healing the weak. He knew all the right buzz words that would tickle their ears, and called each attendee by their first name (we were made to wear name tags). Oh, did he work the crowd! Never once did he disclose that he had never negotiated a short sale himself.
I was absolutely dumbstruck at how many people in this group were nodding and bobbing and raising their hands at his commands.
In this world of free information, you would think that if anyone was interested in investing in short sales they would have the notion to do even limited research before they handed over large sums of money to an unworthy stranger. These attendees were led to believe that they could make thousands upon thousands, within a 30-day period - as the speaker claimed. (If only they would sign up).
The bottom line of this "free" seminar was this: if you wanted to be on the inside, be a "graduate" and make millions, you needed to fork over a mere $3,995 for a three day continuation of this "get rich secret" . . . Which really isn't any secret at all, if you do a little research and obtain a working knowledge of short sales in general.
Throughout the 2 hour presentation, which I did sit through, he projected a slide show presentation of check images he claimed to have earned and mock ups of property profiles that led the audience to believe they, too could sip margaritas by the poolside while the checks came rolling in.
If anyone in attendance really had a clue about property values, and the current real estate market, they would be able see through his thin veil. It's just amazing how people on the edge just want to believe there really is a free lunch. (In this case, not so free as each individual signing up wrote a check for nearly four thousand dollars). So, I ask you, who's making the money here? I speculated that over the four-day presentation series this man walked out of our fair city with more than $100,000 in his pocket.
This is heartbreaking to see people like him jumping on the bandwagon just to take advantage of the down-tide of the market. This scheme may even be worse than the pushing of the adjustable rate loans that forced the economy to the state that it is in now.
If you want to work short sales and foreclosures for profit, I suggest that you do your due diligence and spend some time gathering good, valid information. On my website, Information-Valley.com. I include only the best, must trusted resources for the real estate professional and savvy investor. May I suggest that you start there, sign up for the newsletter, Information Real Estate and be kept abreast of the trends, the systems that work and those that don't. With so many products, offers and seminars appearing I make it my business to take the most promising for a "test spin".
Yes, you are going to have to set aside and dedicate some time for short sale investing. Everything worthwhile takes a little effort. Set a goal for yourself, and stick to it. In the long run you will come out ahead. Remember, there is no free lunch.
After all, I certainly wish you well in your endeavor, for everyone's sake.
Both F. Lanni & Bette Ziegler are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
F. Lanni has sinced written about articles on various topics from Lose Weight, Travel and Leisure and Mortgage. F. Lanni is a Top Producin Realtor in the Million Dollar Club. F. Lanni's top article generates over 90500 views. to your Favourites.
Bette Ziegler has sinced written about articles on various topics from Travel and Leisure. As a successful real estate investor for more than 25 years, Bette Ziegler Has helped many individuals take control of their real estate investments as they become more confident, while building hugely successful net worths. You can tap into her experienc. Bette Ziegler's top article generates over 18100 views. to your Favourites.