The deal is dead! The auction is tomorrow and the lender thinks my offer is to low. So rather then cut into my already tiny profit margin and deal with the un-responsive homeowners, I decided to walk away and move on. I learned a lot in the negotiations of what to do and what not to do. I have decided to list a few positive and negatives things I learned to help other first time investors, so they do not make the same mistakes I made.
5 Positive things:
1) Make sure you get the Authorization Approval right away and fax it over before you start gathering the rest of your short sale packet. It can take a few days for the lender to receive your approval and you can not do anything until you are listed as a third party on the account
2) Always call right when office hours open. I would always call right at 8:00 AM and I never waited more then 1 minute to talk with someone. If I waited until 8:30AM I would usually wait 30 minutes.
3) Do not tell the lender that you are an investor. Tell them that you are a friend of the homeowner and are trying to help them out. They are much more likely to work with you and help you out.
4) If there is more then one loan out on the property take care of both them simultaneously. Submit your short sale packet to both lenders with their respective offers. I started to negotiate the first loan without even contacted the lender in second position. That and along with the fact that I forgot to incorporate what I would need to pay the second lender when I made the offer on the first loan, really killed my deal.
5) The appraisal can make or break your deal. Whatever price they bring back to the lenders holds the most weight on what the lender values the property at. You need their appraisal to be low. You need to be at the property when they conduct the appraisal and make sure that before they leave you have influenced the outcome. No matter how good of a negotiator you are, if the appraisal comes back to high, the deal is dead.
I hope these tips help new investors when they begin their journey in real estate investing and negotiating their short sales. I have included a couple of helpful links below, which are useful for new and experienced investors.
http://www.mortgagereliefformula.com/01/04/how-to-conduct-a-short-sale/
https://newdreamrealestate.com/Short_Sale_FAQs.html
It’s a new day, new deal, new opportunity
Mike Sebeniecher, Texo Properties
