Fighting Value on Short Sales

number1The number one thing you need to understand about a short sale is that the short sale lender must realize the true market value of a property.  Recently we got a house in Sanford that needs everything and I mean everything redone inside and out.  The house has multiple types of siding, the tile inside the house has been pieced together, various sizes and colors, and is pushing up from the ground due to water damage, the rotted wall from the 3rd bedroom was removed which makes the house a 2 bedroom, the air conditioner is not working, doors, lights, fixtures are all missing, and the kitchen cabinets have mold all over them.  SPS is the servicer for the Short Sale Lender and they are really easy to work with.  In fact, they normally process a short sale within 30 days, so you need to be ready when you submit the short sale package to the bank and ask them to provide you with a Broker Price Opinion (BPO) or an Appraisal.

We submitted everything into the bank and were very excited to immediately hear from a BPO Agent (Real Estate Agent) stating that she has been instructed by the Bank to go out and get value.  We scheduled an appointment to meet her out there.  We had everything ready in a BPO/Appraisal Package to provide to her.  We had the following items:  Purchase Agreement, Estimate for Repairs from a Contractor, Comparables and liens from the City for major code violations.  We were at the house 30 minutes in advance so that we could be ready to meet, as some BPO Agents/Appraisers will come to the property earlier than what they stated and we did not want to miss meeting her there.  However, to our surprise, she sent a guy to take pictures of the property which we call “a picture taker.”  Now you would think that pictures are worth a thousand words, however, this picture taker did not provide the Real Estate Agent with any information about the repairs, comparables or liens on the property.  However, we did forward it to the Agent, but since they only make $50 to $75 on a BPO, she was pretty much done with the value on the property.  As you would guess, the value came back “HIGH.”

This was very disappointing knowing that SPS works quickly now we have to fight the value of the property.  First off, we instructed SPS that the Real Estate Agent did not even come to the house and sent a picture taker doing a MAJOR disservice to the Bank.  What that means is that she as a Real Estate Agent is giving her opinion of value on a home that she didn’t even look at.  Of course we pointed out all the problems with the house to the picture taker but the physical smell and condition alone would have had this Real Estate Agent rethinking her value by far, had she actually shown up.  This house can only be sold to a cash buyer due to the condition of everything!!  A conventional buyer would not be able to even get financing due to every single room in the house has major damage including the roof!  The house is not habitable as it stands.

When you fight value of the property depending on the type of loan, the purpose to dispute the value is to get another BPO Agent that will come out to the house and report all of the repairs needed.  Obviously, if you have been doing short sales for sometime you understand that any cosmetic repairs such as paint, carpet and updating is not considered.  However, non-functional use of the property such as it has missing doors, tile pushed up from the ground, mold, entire walls removed, air conditioner not working, roof leaking these items are not cosmetic and need to be considered in the value.

So now the fight is on!!  We have to send in all the pictures, repair costs with pictures of the condition and the repairs needed and comparables to justify that their price is too high.  I wish we could send them the smell or the feel of the property when you walk in, as you can’t even catch your breath!  Then we need to wait for the investor to review the pictures, repair estimates and comparables to see if they are willing to order another BPO.  If they do not, then we need to wait out the BPO value for 90 days, as that is how long the value will be effective with the Bank.  During this time, the house will just deteriorate even more which is disappointing.  All it took was for a Real Estate Agent to come out and do her job instead of just looking at pictures.  Our goal is for the Bank to see the injustice that the BPO Agent did and re-order another BPO so that this property can be sold asap.


The lesson learned on this situation is if the Real Estate Agent states that she is coming out and sends a picture taker instead, refuse to allow access to them and call the bank and request another BPO Agent as they are suppose to spend a minimum of 15 minutes in a home, per another BPO Agent.  If you know anything about BPO Agents, they race through the home in 5 minutes or less and they don’t tell the true story to the Bank which causes lots of delays in short sales.  Always meet the BPO Agent, have a list of repairs from a contractor and comparables.  Remember though, they do not have to take this information from you, but the Bank will always want to see them, so you need to be prepared!!!


Please keep sending me your questions and topics that you would like to hear about, so I can be sure to keep feeding you with the information that you need in order to move confidently through 2016 and bring your Real Estate Dreams to Life!


Kimberlee Frank

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You Can’t Buy & Flip Houses in Sloooow Motion

buyiyflipitAs a Mentor, one of the biggest things I stress to my Students/Partners is that you can’t buy and flip houses in sloooow motion. As soon as a Seller calls you, you should fill out a Seller Information Sheet and schedule for the following day (within 24 Hours) an appointment to see the house. Most of the information that is needed on the Seller Information Sheet you can get directly from the Seller. I have been asked “How long do you talk to a Seller about their home?” Since this is your first communication with a Seller and you NEED to build rapport, you should be on the telephone for a long time. What does that mean to you?

I would suggest at least 30 minutes on the phone to talk to the Seller about their home, their life, where are they going…anything and everything you can think that you might have in common with the Seller. Sellers like to do business with people they like. So, if you are only on the telephone for 5 minutes, then did you build rapport or even completely ask all the questions that are on my Seller Information Sheet? Probably not. Call the Seller right back and ask ALL the questions on the Seller Information Sheet so that you will know what he/she wants for the house, why they are moving, where they are moving and when they want to leave.

What if the Seller doesn’t give you all the information? Then you need to look it up on the public records. You also need to immediately drive by the exterior of the home and if it is vacant, look in the windows and/or secure the home for some people. Sellers assume you have already driven by the house and you are to give them an Offer right over the phone without even knowing anything about the house. You want to know everything you can about the Seller, as the only thing that makes a great investment deal is a motivated Seller. If you don’t have one, then you won’t get the price you need to make it a great investment deal for either a flip or hold.

Recently, I dealt with one of the most difficult Sellers. A Partner and I wanted to go to his personal house in Orange City to get him to sign the Purchase Agreement WITHOUT seeing the inside of the 2nd house he owned. He insisted for us to wait. We overnighted the Purchase Agreement to him, based on the facts that we drove by the vacant home, looked in the windows and knew the values in the neighborhood. We called him to see if he would sign the Purchase Agreement and return it and he informed us that we could now get inside the house to see it. We went inside the house and immediately called him back. Again, we wanted to get him to sign the Purchase Agreement. He had an excuse that his daughter also had to sign and we even offered to drive it to her. In the end, he sold the house to the neighbor at the same $50,000 price that WE had negotiated, for a house worth $140k with minor repairs. He didn’t even allow us to counter our price. What is the lesson on this deal? Drive out to his house and just stop by and see if you can get him to sign it. What if he said no, can’t come in and/or no he won’t sign it right now? Well, we lost the deal anyway so what do you have to lose? See if you can get both Sellers in one location for signing.

Another Student contacted me about a great short sale that had loads of equity in the home. She went by the house, took pictures and even secured the house with new locks since the house was unlocked. I sent the Seller the Offer overnight with a return envelope, at the asking price that she wanted. The Student went on vacation and I called the Seller several times. The Seller had built the rapport with the Student, not me, so I did not have the relationship that the Student had. I finally got a hold of the Seller and she informed me that she received another offer which was $6,500 higher than ours. I told her that we could match it, as the Student did get in to see the house after our last call. She refused to sign with us and said she was going with the other person. The Seller lived out of town, so how do you think you could have made this deal work? I believe constant contact with the Seller with long discussions to build better rapport. Obviously, the other investor offered higher, offered to pay for an attorney and could close in 10 days or less. Which doesn’t always happen due to inspection, title work and closing package; however, they locked the deal. Next time, I would suggest that listening longer as to what the concerns are with the Seller will get us the deal.

Another Student spoke with an elderly woman who owned a vacant home. The student gave her the amount that she wanted, prepared a purchase agreement and even went to her location where she lives. She then said that she had things in the house that she wanted and needed to wait 2 weeks prior signing the purchase agreement. The student did offer to help her move her belongings and extend the time of closing on our Purchase Agreement, however, she still wouldn’t sign. As to the status of this deal, I don’t know yet. The Student definitely needs to go again to the vacant house and see if there is any activity there and go to the Seller’s house and get the deal signed. However, obviously we did not really find out her main concern why she won’t since the contract, so it will take another 30 minutes at her house, face to face, to get this deal done.

My hope is that this article will deeply impress upon you the importance of a 24 hour contact with the Seller, going to the house, whether or not you can get in, filling out the Seller Information Sheet with all the information on the home, knowing your comparables and having the Purchase Agreement ready to be signed the day you go to the house. Let me ask you as a Buyer: Do you have to buy the house, if after the inspection you found out that your repairs are too much or you won’t make any profit on the house? No, you don’t have too; however, you have locked the house up for at least 15 days for inspection and no one else can buy the house. Also, if the price is not a good deal for you, you can always counter the Seller at that time, after inspection, to see if you can make it a win-win situation. If not, then you didn’t lose anything. You did receive the knowledge and the experience of dealing with a Seller, identifying repairs on the house and how to make the next deal better!

Please keep sending me your questions and topics that you would like to hear about, so I can be sure to keep feeding you with the information that you need in order to move confidently through 2016 and bring your Real Estate Dreams to Life!


Kimberlee Frank

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Finding Deals in a Seller’s Market

findingdealsThe number one thing that makes an Investor successful is finding, buying and selling properties from a Motivated Seller. As I have stated in previous articles, the only thing that makes Investors money is a Motivated Seller. So … how do you find motivated Sellers when it’s a Seller’s market? There are several ways to become successful and as an Investor the key to your success is having a marketing machine running all the time. A Seller’s market means that when a property is listed on the Multiple Listing Service, the Sellers receive multiple offers from Investors, homeowners and landlords. Obviously a homeowner is willing to pay list price or more for the house since they are going to live in the property and there is a personal attachment. Landlords will pay up to 75% to 80% of the market value and Investors pay 60% to 65% of market value. Yes, the repairs come into consideration for the Landlord and the Investor, however, the homeowner is more accepting of repairs needed to the home, as they are planning on making changes anyway. Therefore, submitting offers on the Multiple Listing Service is very time consuming for an Investor and the rate of acceptance is much lower than for a homeowner.

The first thing that I would recommend to all Investors is that you need to find a List Source that is accurate and updated every 30 days, at minimum, so that we could mail to them and/or door knock. Recently I have been mentoring a group of students and we were all using the same list provider and we decided that since we were not getting as many calls as I truly believed we should have received, we started comparing this List with another List Source. What we found out is that the List source that we had been using was more than 1 year outdated, meaning that when the property was sold to another individual, the old Seller’s name was still on this list, wasting all of our marketing dollars. I know that Investors get disappointed easily as many people sell the sizzle of investing in real estate and not the meat and potatoes of what is required to get your business up, going and successful.

Every Investor should have 1-2 List Sources to use for marketing. They should also review their leads and make sure that the information that the List Source is providing is correct information. I am not saying go through all your leads, I am just saying go through the first three to four leads to determine if your List Source has the correct information.

What I have also found, as a Mentor, many Investors will spend most of their money on training and not leave a marketing budget to implement the training and allow you to become successful. Yes, there are several cheap ways to market such as business cards, bandit signs, flyers, social media and websites; however, to be successful in real estate you will need to do 5 different types of marketing. During my 1 Year Mentor Program, I help get you properly “business” structured, build a team, set a marketing budget and teach you how to find Sellers in several ways other than just making offers on the Multiple Listing Service. I truly do believe that Investors should do what their pocket book allows, meaning if you have to write, print and mail your own letters then let’s do it. However, when I Mentor individuals, I find out that life gets in their way, stopping them from mailing out letters, handing out business cards, putting up bandit signs, handing out flyers, and even marketing on social media. Therefore, I am recommending to my Students and everyone that is reading this article it is time for a SHIFT. You need to hire a company that specializes in sending out marketing letters and have them send out at least 500 letters for you to start your marketing machine. I know what you are thinking . . . I can’t afford it. Well, I am telling you that you can’t afford not too! Take the time to find a company that will write, print, stuff and mail your letters immediately. Trust me, you will start seeing a big increase in your deals!

I suggested this to one of my Mentor students from Michigan and on his first mailing, he got at least 7 Seller leads. He went and met with a Seller that is willing to sell her house to him well below market value. Your leads are ‘hot leads’ which means when a Seller calls you about their house, you should have an appointment set within 24 hrs to go look at their house even though you may not know for sure that it is a deal. Honestly, I can tell you that most Sellers will advise you that the house is in perfect shape and needs no repairs. That could be true for a house built in 1969, however, if we are buying that house to rehab and then competing to sell that house in this market, I will need to update the house to today’s standards to get top dollar when I sell.

Prior to going out to the house, you should have done research on the property so that you can see the values of the property (Zillow, RealtyTrac, Trulia) no more than .5 miles away and specifically in the same subdivision. If you are going to buy and then resell to a new homeowner, you will need to know what your market is bearing. Comparables need to be houses that have sold no more than 3 to 6 months ago. I also look at what is pending and active with contract, as they will also have an effect on the value of my home when I sell it.

You also need to do research on public websites to see who the owners are on the property, what they bought it for and all liens on the properties. Obviously, we can ask the Sellers these questions, however, sometimes that will not tell you the truth and/or they will believe that the second loan on the house is not owed because maybe it was taken out by their deceased spouse, sister etc. Every question that I have on my Seller Information Sheet is vital and needs an answer from the Seller, as there are several ways to purchase a home. Subject to, Cash, Installment for Contract, Option, Lease Option or a combination of things.

When you go to the house, make sure you take pictures of every room as if you were going to market the house. Also, in every room of the house, take pictures of all the bad things that need repairs and/or questions you may have. You should be at a house for at least 30 minutes or more in order to take your time and build rapport with the Seller. You should also have a purchase contract ready to be signed on the property the day you go or within 24 hours after seeing the house. You should fill out a Property Inspection Report (provided in my System) that will help you determine what you think needs to be done to the house, versus trying to remember everything.

Many Investors are afraid that if they make an offer on the property and it is too high, that they will lose money on the deal. You all need to get over this! A Purchase Contract has a minimum of 15 days inspection period so during that time, you can have contractors, inspectors and/or Mentors/Partners come out and review the condition of the home. If the price is too high on your offer, you can counter the Sellers and if they won’t accept the offer, then back out of the contract. Stop thinking about it, just go get a deal and make a mess! If you have a good Mentor, then she will clean up your mess! That is what I tell all my Student/Partners!

I am going to summarize this Article to break it down and make it so simple for you.

1) Obtain a List Source,

2) Pay to have a minimum of 500 letters mailed out for you,

3) Fill out Seller Information Sheets and set an appointment with the Seller 24 hours from the time of their call,

4) Do research on the property such as values, deeds, mortgages or any other liens,

5) Have a Purchase Contract ready to sign when you go to the house,

6) Take pictures of the house good and ugly, fill out the Property Inspection Report to determine the possible costs for repairs (Take a guess if you don’t know and then learn costs for future deals,

7) Fill in the amount of the Purchase Contract whether it is terms or cash,

8) Have an inspection with your contractors, mentors/partners or maybe even possible buyers,

9) Counter the Seller if the numbers don’t make sense,

10) Close the deal and make MONEY!!!

I hope that this article has helped you all move past the FEAR of failure, as in any deal, there is an escape clause and Buyers always can walk away from deals without losing money.

Please keep sending me your questions and topics that you would like to hear about, so I can be sure to keep feeding you with the information that you need in order to move confidently through 2016 and bring your Real Estate Dreams to Life!


Kimberlee Frank

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