The Meeting with the Mighty BPO

shortsalefloridaI have spoken with several Realtors and Investors who say that they don’t like short sales and I always ask them “WHY?” They tell me that the Short Sale Lenders never come back with a value that matches the offer that they have on the property. I always ask them did they go out and meet the real estate agent or the appraiser who was sent from Short Sale Lender to provide the value back to the Lender? Their answer is always “NO.”

In fact, many Realtors who list short sales will list high because they are paid on commission thinking that the house should sell at list price. However, they never take into account all the repairs needed or the updates that are required to allow the house to obtain an appraisal at list price. Therefore, their short sale sits for months and ends up going to foreclosure sale. In fact, because they said they didn’t go meet the BPO Agent and just gave them the lockbox code or they have an electronic lock box on the house, the BPO Agent is able to get into the house and only spends about 5 minutes at the house.

As a Real Estate Broker who gets commission on short sales, I would always like to get as much as I can, however, not meeting the BPO Agent can cost me big time and big money.

Since I am a Real Estate Broker and an Investor who buys short sales, this is what I always recommend to Realtors and Investors. Always list the property low, as it is not up to the Realtor, Seller or Buyer to tell us how much the property is worth; it is up to the Short Sale Lender. I never allow an appraiser or a real estate agent obtaining value on a home to go to the house by themselves, not even for my straight sales. The BPO Agents only receive $50 to $75 on a BPO and the Appraisers are receiving a lesser amount than they would receive if this was an appraisal specifically for the Buyer’s financing. The Appraisers receive $350 to $500 for mortgage appraisal when an individual is buying a non-short sale and they would receive $100 to $200 if it is a short sale appraisal completed for the Seller’s short sale Lender.

So … what do you say and take with you when you meet a BPO Agent/Appraiser for the short sale Lender? You must provide the following information: Purchase Agreement, Sold Comparables in the last 90 days if possible no more than 6 months and no further than .5 miles away, Repair Estimates from Contractors, Hardship Letter, Crime Report of the area, and anything else that would provide the BPO Agent/Appraiser with the facts about the house so that they can determine the “real value” of property.

Unfortunately, some BPO Agent/Appraisers will not take this information. Then what do you say when you meet them? Make sure that they are aware that the house is in foreclosure and the price that the buyer is willing to pay.   How do you do this? EXAMPLE: I normally say I have an offer to give to you on this house in the amount of $150,000 and this is a foreclosure. I will then say that I have several contractor estimates for the repairs that are about $25,000. I might even make a joke that I am surprised to see an offer so high on this property of $150,000 with soooooo many repairs. I will say that it looks like about $25,000 worth of repairs and ask them if they agree.

Remember, you always start by telling them that you have a package for them including the Purchase Agreement, Comps, Estimates, etc. Always remember to build rapport with them so that they are likely to work for you versus working against you.

If you don’t meet the BPO Agent/Appraiser out at the house and provide them with the above information your value will always come in HIGH and you will have to wait another 90 days or up to 4 months before you have a chance to order another one from the Short Sale Lender.

Thank you so much to all of you who continue to send me your questions and topics that are most helpful for you to read about. Your Success is important to me, please let me know how I can help!!!

Happy Negotiating!

 

Kimberlee Frank

www.SellFastRealty.com

www.ForeclosuresGonewild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

Like me on www.facebook.com/foreclosuresgonewild

Like me on www.facebook.com/sellfastrealty

 

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

LENDER DENIES SHORT SALE BUT STILL GETS PAID

deniedshortsaleNegotiating is a vital part of your business when it comes to cashing big on short sales. It is always important to know who the investor is on the loan, and I’m not referring to who is servicing the loan and collecting the Sellers payments. There is an investor behind the scenes. Also, find out the type of loan, ie: private, conventional, FHA, Fannie Mae or Freddie Mac and whether there is private mortgage insurance (PMI) or mortgage insurance (MI) on the loan. Knowing all these facts allow you to negotiate based on the percent of value each one of the Investors and/or Private Mortgage Insurance Companies on the Loan will accept on a short sale.

I found this new information to be very interesting and should not be taken lightly when negotiating on a short sale. Many Sellers are behind on their monthly payments which include principal, interest, taxes and hazard insurance. When the Sellers make their payments, the taxes and insurance monthly payment is placed into an escrow account to pay the taxes and hazard insurance when they become due. When there is not enough money in the Sellers escrow account to pay taxes, the Lender will pay them. However, when there is not enough money in the Sellers escrow account to pay the hazard insurance policy, the Lender still pays it, but it becomes Mortgage Forced Insurance. This is in place only for the protection of the Lender, not the Sellers, and normally costs 2 to 3 times more than normal Hazard Insurance.

In a current deal, I was arguing that the value that the Short Sale Lender has on the property is incorrect (way too high) due to the following problems that were discovered in the home inspection: electrical wiring was not installed properly hanging out the walls, termite and beetle damage done to the wood frame of the home, roof damage caused by the storms, and a spiral stair case that is not up to building code as the only access to the second floor. We went back and forth several times when the negotiator stated that should the buyer not close with the approved short sale price, then they will just file a claim. To me that was a red flag!! This was a conventional loan and conventional loans do not have private mortgage insurance on the property. A question was asked to the negotiator was there private mortgage insurance on the loan and she said “I’m not saying that.” However, it was too late she let it slip out. You see if there is private mortgage insurance on the property, then even though there is an Investor on the loan, the private mortgage insurance company has a say whether they will approve the short sale or not. Many negotiators do not even submit the entire short sale package to the private mortgage insurance company, therefore withholding the facts about the Sellers during a short sale negotiation. Or if the purchase price does not meet the Investor’s guidelines to approve, the negotiator won’t submit it to anyone, they will just deny the offer.

There are 5 Private Mortgage Insurance(PMI) Companies that the Lenders use and all of them use the social security numbers of the Sellers in order to determine whether or not they have insurance on the Loan. Many real estate investors when negotiating a short sale will not even contact the Private Mortgage Insurance Company, they will just deal directly with the Short Sale Lender’s negotiator. However, I deal with both, as sometimes the PMI Company will approve a short sale even though it doesn’t meet the guidelines of the Investor on the Loan. I contacted all the PMI companies on this deal, only to find out that the Sellers do not have PMI on the property. At that point, it got me thinking! Then what type of Claim is the Short Sale Lender going to file and with whom? After thinking about this for about 24 hours, it hit me! They were going to file a Claim on the Forced Mortgage Insurance Policy (Hazard Insurance) which they got on the home.

I contacted the Short Sale Lender’s insurance department only to find out that they only have information on the Sellers Hazard Insurance Policy and not the Forced Mortgage Insurance Policy. I contacted customer assistance twice to find out what company has the insurance on the home, only to find out that they did not even know how to provide me with this information.

I then went down to Farm Bureau Insurance, in the same complex as my office, and asked them if they issue Forced Mortgage Insurance for Lenders. I was informed that this is a specialty insurance and that the Lenders work directly with Insurance Companies that only provide that type of insurance. I asked for names and numbers of companies, but they were unable to give me any. I then asked them about the process of a Claim. I spoke in detail only to find out if the Short Sale Lender did obtain an insurance policy that would cover roof damage, termite or beetle damage, or any specific type of insurance for that property that “YES” they may be able to get paid on the Claim. To me, I thought any Insurance Company that would insure a pre-foreclosure or vacant home would be out of business quickly should they be paying out on Claims for these types of matters. Normally, in order to obtain hazard insurance, the insurance company has to have a 4 Point Inspection ie: Roof, Electrical, Plumbing and AC/Heating System in order to obtain a policy. I reviewed the fact that my Seller’s house has been vacant for some time and the Short Sale Lender did keep changing the locks without permission. So, MAYBE an insurance agent did get inside the property. However, Farm Bureau’s Agent did inform me that just because a Claim has been filed on an insurance policy, this doesn’t mean that the Claim will be paid. He said that there are lots of exclusions, ie. was the electrical and roof in that condition prior to being insured? When did the termite and beetle damage occur, prior to insurance or while being insured?

This house is scheduled for a foreclosure sale on September 4th. What is my next move? Since this is not the Sellers insurance policy and a Claim has not been filed, I will have no leg to stand on trying to get the Claim denied or showing them the condition of the home now. So … what can I do? I will need to sell this house to the highest CASH Buyer which will not be an investor it will be a homeowner, see if the Short Sale Lender will approve it, and request the Sellers to obtain an attorney to postpone the Foreclosure Sale if I am unable to get it postponed and closed. I have a small likelihood of getting this one through, however, if the Foreclosure Sale can be postponed, a new value will be ordered by the Short Sale Lender and my chances of success are much higher. I do not give up on a short sale until I get it approved or, on occasion, it goes to Foreclosure Auction.

There are many successful tips I provide to you on short sale negotiating which I include in my course. Remember, we don’t get every short sale, but we never give up. We owe it to our Sellers to do everything possible to help them. And…..making some money on a deal is better than no money.

Thank you so much to all of you who continue to send me your questions and topics that are most helpful for you to read about. Your Success is important to me, please let me know how I can help!!!

 

Happy Negotiating!

 

Kimberlee Frank

www.SellFastRealty.com

www.ForeclosuresGonewild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

Like me on www.facebook.com/foreclosuresgonewild

Like me on www.facebook.com/sellfastrealty

 

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Mailing for Dollars!

mailingfordollarsMy students always ask me “How many letters do we have to mail in order to get a deal?” Before I answer, I want to state that the #1 reason a Seller sells their house for less is because they are motivated. An unmotivated Seller will not take less for their house, as they are not in a hurry to sell. Let me clarify the situations that make a Seller motivated:

 

  1. Property is upside down – they owe more than it is worth.
  2. Property taxes have increased and they can’t afford to pay them.
  3. Mortgage interest rate(s) adjusted to a higher payment that they cannot afford.
  4. Job Relocation and they can’t sell the house fast enough.
  5. Divorce or Separation will send individuals into foreclosure because they depended on two incomes.
  6. Job loss or reduction in their income.
  7. Bankruptcy – For most people who are upside on their bills, it also includes their house payment. It is important to know whether or not your Seller is in bankruptcy or planning on it. No transfer of a property can be done while the Seller is in bankruptcy.
  8. Retirement causes a reduction in income.
  9. Insurance rates have been increased and they can’t afford the insurance.
  10. Illness, Permanent Disability or the Death of Spouse/Family Member causes individuals to get behind on their payments.
  11. Exhausted Landlords – Most of the time, the Landlords had great credit but the Tenants won’t pay and the Landlord may have used up all of their financial reserves.
  12. Economic and Functional Obsolescence The Seller may own a residential property, but it’s located in a commercial district. The floor plan of the house is old and chopped up.
  13. Business or Partnerships failing
  14. Vacant House

 

When mailing to someone who has one of the above situations, then you have a higher chance of the Seller selling their property for less. How many letters do you need to send to Sellers saying that you want to buy their house for cash before you get a deal? You should mail at least 1,000 letters to Sellers who have a “minimum” of one of the above challenges. Should they have two or more challenges on the list, you have a better chance of getting a minimum of one deal. Therefore, the criteria for compiling your mailing list will directly affect your capture rate. Mailing 1,000 letters to a bad list with irrelevant criteria will only bring you frustration; it will not get you a deal. There are many list providers; I use Reifax.com for a list of individuals who have foreclosure actions filed against them. I fine tune my criteria to select Sellers who have been in foreclosure for a minimum of 3 months. The reason I do this is that the Sellers have attempted loan modifications and have already made a decision as to how to proceed on the foreclosure action. Or should I say the likelihood of them responding is much higher versus when they are first served with the foreclosure action.

 

In addition, the content of your marketing letter is equally important. I have used multiple types of marketing letters and business letters, and tested them against the “Yellow Letter.” I found that the “Yellow Letter,” since it is handwritten and mailed in a handwritten invitation envelope, will pull much better than a typed business letter in a business size #10 envelope. The reason for this is because most Sellers in foreclosure are not opening their business envelopes, as they are in denial of their situation. However, a handwritten invitation envelope makes them think that someone knows them and they are sending them a card – like a birthday card. In addition, they are hoping that there may be money in it and there is! They can sell their house for cash!

 

Marketing is the key to your success in getting more deals. It is a Sellers’ market here in Florida and getting a Seller respond to you will increase the amount of deals that you would get versus making tons of offers on the Multiple Listing Service. However, I am not saying that you shouldn’t make offers through the MLS. I am suggesting that if you are making offers on the MLS, look for key criteria words such as: motivated seller, TLC, handyman special, short sale, vacant, immediate occupancy. These are some of my key words that I search for when making offers through the MLS.

 

So … continue to mail your letters and check your list to make sure that you are actually targeting a list of motivated sellers. Please do not mail letters to a generic list, use your marketing dollars wisely. You need to have 5 types of marketing in order to bring you deals:

 

  1. Letters
  2. Bandit Signs
  3. Business Cards
  4. Websites
  5. Advertisement in the Newspaper

 

Should you not get any deals after marketing to at least 1,000 letters, please stay positive and press in! Do not give up. Keep marketing and evaluate your list and marketing letters. The deals will come if you keep marketing! They will!!

 

Happy Negotiating!

Kimberlee Frank

www.SellFastRealty.com

www.ForeclosuresGonewild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

Like me on www.facebook.com/foreclosuresgonewild

Like me on www.facebook.com/sellfastrealty

 

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

 Page 8 of 26  « First  ... « 6  7  8  9  10 » ...  Last »