Yes, there is, in fact, a secret to short sales. And once you learn it, you will open up your finances to an entirely new tax bracket. As you have recently seen, short sales have become an integral part of the real estate industry as a whole. Some 20 Million homeowners are upside down in their homes right now, that’s 1 in 5 borrowers.
If you live in Vegas or Miami, that number jumps to 2 out of 3 borrowers. Just a few years ago, most people in real estate rarely dealt with short sales. And that is the problem. There is very little accurate information about short sales, and therefore, most people are doing them incorrectly.
What I am about to share with you is the secret to short sales, so that you can, once and for all, begin doing them correctly, whether you are a homeowner doing a short sale on your own property, an investor looking to make money with short sales, or a real estate agent trying to make short sales a profitable part of your business.
Oh, and one more thing. I am going to shoot you straight here. I may step on a few real estate professionals’ toes with this secret, but you deserve to know the real story and that’s exactly what you are going to get.
The secret to short sales is making an offer
This is where most people get the short sale all wrong. Let me illustrate. First, a homeowner recognizes that they owe more than what their house will sell for, or are in foreclosure, or both.
Second, the homeowner logically assumes that their best course of action is to contact a real estate agent. Third, the real estate agent will then proceed to “list” the property by putting it on the market. All seems normal, but behind the scenes, there is no short sale.
The reason is that a short sale does not begin until the bank gets an offer. The mere act of putting the property on the market is, in fact, not the solution at all. The solution is making the right short sale offer to the lender. And that’s the big secret.
Giving it to You Straight
Here’s how the scenario typically plays out. With the market the way it is, the average struggling buyer’s agent is not going to take her clients to short sale listings because they know that it can take upwards of 3 to 4 months before the deal closes (if it closes).
Most buyers are not in a position to wait 4 months to move into a new home. Most buyer’s agents are really hurting financially and showing their coveted buyer a house that won’t close for 4 months will not help their short term financial needs. In fact, agents in Las Vegas have an unsaid rule right now that they do not show short sale listings. Ouch.
I may have just enraged some buyer’s agents out there who are offended that I would accuse any licensed professional of such a selfish action. But like I said before, I’m giving you the straight talk here, and that is exactly what happens in the real world.
The reason why the secret to short sales is in making the right offer is because when the right offer is made to the lender, the short sale process begins. So someone needs to make an offer to the lender to actually get the ball rolling and help America’s borrowers from barreling to foreclosure.
Enter the Savvy Investor
It is my opinion that the best person to make this offer is a real estate investor. Further, unlike some investors who would submit arbitrarily low-ball offers to the lender, the borrower needs an investor who is savvy enough to offer an amount that fits within the lender’s short sale approval guidelines. [The subject of Phil’s next article, The Biggest Mistake Short Sale Investors Make]
Once the right offer is submitted, the lender will then go about the process of evaluating the short sale amount they will accept. Then you’ll know what the lender will accept. Finally, the investor who made the offer can buy it.
Or if the investor can’t make it work for whatever reason, the borrower can then market the property on the MLS at a lower price with the added bonus that the deal can close quickly.
This will eliminate the 3 to 4 month wait time (because you have already done this part). And, although it is technically still a short sale, to all the buyer’s agents out there, it is a normal transaction because the approval has already been achieved. That is the secret to short sales.
You Need to Play the Bank’s Game
“Why can’t the bank just tell me what they will accept without having to make an offer?” is a question I get a lot. My answer, “Sorry, that’s the way the banks play the game. Either you play by their rules or don’t play the game.”
Once you recognize this truth I’ve just shared with you, you will look around your community and realize that most people are doing short sales all wrong. Then it’ll dawn on you how much money you can make now that you know how to do it the right way.
Then I can say to you, “Welcome to the club–making tons of money doing short sales the right way.” Happy investing!
About the Author:
Phil Pustejovsky has been leading everyday people to financial freedom for nearly a decade through the power of real estate. He is a best-selling author, legendary investor, national speaker, and highly-sought-after mentor and real estate coach. Well known for being a part of over 1,000 transactions, Phil has been recognized as one of America’s leading authorities on residential real estate. He has also shared the stage with the industry’s most respected leaders, including Robert Kiyosaki, Al Lowry as well as many others. Phil’s mission is to transform financial lives through his innovative trainings, courses, and coaching.
Phil Pustejovsky has been leading everyday people to financial freedom for nearly a decade through the power of real estate. He is a best-selling author, legendary investor, national speaker, and highly-sought-after mentor and real estate coach.
Well known for being a part of over 1,000 transactions, Phil has been recognized as one of America’s leading authorities on residential real estate. He has also shared the stage with the industry’s most respected leaders, including Robert Kiyosaki, Al Lowry as well as many others.
Phil’s mission is to transform financial lives through his innovative trainings, courses, and coaching.