The Short Sale Shortcut...a.k.a The Reverse Short Sale
In many areas of the country, real estate values are starting to head upwards.
The big money hedge funds know it, and as a result, they are buying properties at full retail prices from the MLS. At the same time, retail buyers looking for a primary residence, are enticed by historically low interest rates.
(When my wife and I bought our first home, back in the 1980’s, our interest rate on our mortgage was 18% – and we both had perfect credit!!)
So folks today understandably want to get a home of their own, before the rates go back up.
This interplay between hedge funds (institutional buyers) and “regular folks” (retail buyers) has created a little more competition for investors in those markets where inventory is getting thinner.
Many investors are looking for new creative ways to find deals with the “unfair advantage” I talked about in my last post.
However, in most markets, short sales are still out there in great demand. And if you live in a state that has a judicial foreclosure process, then upside down houses in foreclosure can drag on for years. In Florida where I live, a foreclosure can easily drag on for 5 years!! This means that there will still be an abundance of short sales for the next several years.
Some investors don't like short sales because they are “too much work”.
Heck, I used to feel the same way – until I discovered a technique Cody Sperber (a.k.a The Clever Investor) showed me called the Reverse Short Sale. This little known secret is just the solution I was looking for so I want to break it down for you in this blog post so you can do it to!
So here is the setup to doing this short sale shortcut...
Some investors feel that chasing short sale deals is too much work, because first you have to find the seller who is upside down in their house. Then you have to get to property under contract with the seller. Then, at this point, the real work only just beginning, because the seller must produce all the paperwork associated with a short sale. This can include two years’ tax returns, W-2 forms, bank statements, hardship letter, just to name a few.
Many sellers, if they are staying in the house and NOT paying their mortgage company, have a FREE roof over their heads – and they drag their feet to produce all the documents (because the sooner they have to leave their upside down house, the sooner they have to start paying rent somewhere else). This can make a short sale negotiator’s job a frustrating “paper chase”.
Cody Sperber's Reverse Short Sale saves you from all that
And here is how…
Cody Sperber's Reverse Short Sale In A Nutshell
You see, the MLS is loaded with properties that are sitting in the process of a short sale.
These listings are usually identified as “Pending Short Sale” on the MLS.
You can go through the MLS listings in your area, and simply look at all the “Pending Short Sale” listings. Just call the listing agent, and introduce yourself as a cash buyer. Then assure them that you will step into the deal just prior to closing if their current buyer flakes out prior to that time. As long as you like the price of the house (and remember, you always must buy at a wholesale price) that the bank has approved, you would be happy to close the deal.
This is attractive to many Realtors, because they simply want the deal to close, so they can get paid. When you offer to step up to the plate and close the deal using your cash (or a cash “hard money” loan), the Realtor knows this deal is going to close “one way or another”, and they are going to get their commission with no hassle.
And, yes, most Realtors just want to get paid. And they deserve to get paid! After all, they have found the seller, obtained a listing agreement from them, collected all that paperwork we discussed earlier, and (in many cases) held the seller’s hand through a mortgage qualification process…
…only to find out that their listing they worked so hard on may not close.
When you close a short sale listing for a Realtor whose original buyer has flaked out, you look like a superhero to the Realtor, and they will give you more deals.
So lets recap. What will you do to flawlessly execute your own “Short Sale Shortcut”?
- You let the Realtor find the upside down property.
- You let the Realtor deal with all the seller’s emotions (because the seller is losing their home and crying on the Realtor’s shoulder – not yours).
- You let the Realtor deal with chasing all the paperwork the seller must produce for a short sale.
- And you let the Realtor deal with the bank negotiations (which can be the biggest frustration of all).
All you must do is get on the phone and instill some trust and confidence in the Realtor. He simply needs to understand that you can handle the act of buying his Short Sale listings, if and when their original buyer backs out.
And if the specific property you have targeted is already part of a solid short sale transaction, which is going to close without incident, then ask the Realtor what other listings they may have. You just might be talking to a Realtor who needs for you to be a buyer on many of his future short sale listings, or back pocket deals.
And that, my friends, is how you do a Reverse Short Sale.
Enjoy the Journey,