2010 RP

Slide 1: 

A Better Approach with Short Sales

Purpose of this Presentation : 

Purpose of this Presentation Explain a more effective way to work the booming short sale market

What we do : 

What we do Cash buyer Add value to property Resell for a profit We do it the right way

Our Goal? : 

Our Goal? If you have short sale listings we want to buy them. We want you to work as our buyer’s agent. Help us locate short sale prospects that meet our criteria. Work with us on your new short sale listings. Work with us on the unlisted short sale properties we bring to you.

Benefits for Agent & Homeowner : 

Benefits for Agent & Homeowner Committed Buyer Immediate Cash Offer We Manage 100% of Process Online Tracking System Several Exit Strategies

Additional Benefits to Realtor : 

Additional Benefits to Realtor Position your business as the “Go To” Realtor Buyer in Pocket – Changes your approach New Business - We bring leads and listings to you. More Closings – More commissions.

Important Facts : 

Important Facts No Equity Skimming No Straw Buyers No Power of Attorney No Land Trusts Do Not Sign Over Deed We work with full disclosure

Typical Short Sale Process : 

Typical Short Sale Process Frustrating Complicated Time Consuming

Why short sales in 2010? : 

Why short sales in 2010? 30…40…50+% of listings are short sales More on the way in 2010 & 2011

Anatomy of a Short Sale : 

Anatomy of a Short Sale Goal of each Party Homeowner – Avoid foreclosure and salvage credit Lender – Minimize their loss Agent – Earn commission Buyer – Discount on a property Seller approaches agent and…..

Typical Approach to Short Sales : 

Typical Approach to Short Sales List property “For Sale” on MLS. Price at FMV to attract buyers. Lower every 2-4 weeks if necessary. Spend time/money marketing for offers. Hopefully receive an offer. Negotiate the best possible contract. Secure buyer. Prepare 50-70 page short sale package. Send offer to lender with short sale package. Negotiate short sale over next 2-6 months. ***After several months…is the buyer still in the game?

Typical Problems : 

Typical Problems Low success rate. No buyer - unable to generate an offer. Waste valuable time and energy on listings that don’t produce income. BPO not handled correctly – bank overvalues property and rejects fair offers. Buyers walk - Lose buyers because the process took too long or buyer finds better/easier deal on ‘closeable property’.

Real Estate Agent Mistakes : 

Real Estate Agent Mistakes Incomplete short sale package - over 30% are incomplete and result in more delays(sometimes 30+ days). Unable to follow up with lender to keep the file moving (more delays). Do not understand the importance of interior BPO. Offer is too high? A mistake? It can be if the buyer walks. Bank approves. Buyer doesn’t close, walks, or finds better deal. Is approval above current value of property? Very difficult close if next offer is lower than approved price.

Real Estate Agent Hurdles : 

Real Estate Agent Hurdles Commissions may be discounted by some lenders. Need a buyer – Must have offer to start the process. Find a buyer but the short sale process takes too long so the buyer “walks”. Time wasted with the lenders when they should be promoting their properties, generating new business, and developing the growth of real estate business.

Our Solutions to Short Sale Success : 

Our Solutions to Short Sale Success 1) Commissions may be discounted by lender We can guarantee a full commission on every deal that closes. Original listing agent receives 3% with less work. Work as our buyer’s agent and make full commission and more.

Our Solutions to Short Sale Success : 

Our Solutions to Short Sale Success 2) Need a buyer – Must have offer to start the process We solve this issue for homeowners/agents. We make an immediate cash offer as long as it meets our criteria. Offers are simply to start the short sale process. Better to start low – we can always come up. Once the BPO is completed we negotiate with the lenders and raise the offer price thru lender negotiations.

Our Solutions to Short Sale Success : 

Our Solutions to Short Sale Success 3) Find a buyer but the short sale process takes too long so the buyer “walks” Widespread problem: Too many buyers walk because of delays. We are investors. Interested in profit. Committed buyers who will not walk because of delays. Unlike typical homebuyer, we understand the process, as well as, the inevitable delays with short sales.

Our Solutions to Short Sale Success : 

Our Solutions to Short Sale Success 4) Time wasted with the lenders Instead of wasting time on ‘dead end tasks’ with lenders such as hours on hold and hours of follow up, the agent can spend most of their time on income producing work. We handle the lenders. We keep all parties informed every step of the way with our online tracking system at www.ShortSaleManage.com Allows our Realtors to: 1. Efficiently work one of the largest segments in real estate today. 2. Position themselves as the short sale ‘go to Realtor’ in their area. 3. Generate more listings, business, and closings. 4. Increase earnings. 5. Realtors spend time doing what they do best – marketing and promoting their business instead of working as an unpaid debt negotiator.

Online Tracking System : 

Online Tracking System www.ShortSaleManage.com What it means for you? Centralized short sale center. Review or retrieve all documents. Instant email notification. 24/7 online access. Centralized Short Sale System Improves Efficiency Saves Time Easy Online Access Updates, Notes, & Documents

Which approach works best? : 

Which approach works best? Typical short sale or… Working with us A coordinated plan that provides more exit strategies for the seller, leads to a higher closing rate, and results in more commissions

Several Exit Strategies : 

Several Exit Strategies Plan A - Buy and Hold Plan B - Buy and Rehab – 2nd Sale in 20-45 days. Plan C – Buy and Quick Sale – Two transactions. Plan D – Sell to End Buyer. We back out and let end buyer purchase directly from homeowner. More options = Greater success for agent and seller.

Add value without rehab : 

Add value without rehab A legitimate property flip: Adding value to a distressed property by eliminating all liens through months of work. Once we get written approval and purchase the property it is no longer distressed. There is a difference in value between a ‘distressed sale’ and a ‘retail sale’. No longer a 3-6 month period to close for end buyer. Now a typical retail sale. Can close in 2-5 weeks. This attracts more buyers and adds value to property. Buying distressed property and quickly selling for a profit is a legitimate property flip. This type of property flip helps to stabilize the housing market.

Freddie Mac Agrees! : 

Freddie Mac Agrees! Sales of properties that the property seller acquired at below market value after purchasing as a result of a distress sale (i.e. short sale), where any increase in the sales price over the property seller's acquisition cost can be clearly shown to be a result of the difference in the market's reaction to distress sales and typical arms-length market sales. “ ” Best Practices for Loans on Property Flips Freddie Mac Bulletin Oct 2009 Freddie Mac Bulletin 2009-24: Defines Legitimate Property Flips

Negative Impact on Value : 

Negative Impact on Value Current Value: $250K Liens: $350K Can’t be sold without lender approval. The Impact? Delays, fewer buyers, & a value below $250K

Same Property – 2 Values? : 

Same Property – 2 Values? Short Sale Liens on Property Can’t Sell Buyers Avoid Retail Sale Can Sell Can Close More Buyer Interest Which property has the higher value?

We add value : 

We add value Eliminate Liens and Add Value to the Property Our ‘sweat equity’ increases value

After Lender Approval : 

After Lender Approval Short Sale Liens on Property Can’t Sell Buyers Avoid Lower Value Retail Sale No Liens Can Close Add Immediate Value Higher Sale Price

Within 1 month? 1 week? 1 day? : 

Within 1 month? 1 week? 1 day? One Property Two different values Even on the same day? Absolutely. A ‘legitimate flip’ according to Freddie Mac. These transactions close every day & in every state.

Hundreds each day : 

Hundreds each day These transactions are completed each and every day. Sarasota County, Florida Population: Only 370,000 One Day Short Sale Flips: 25 to 30/month in this small county

FHA Buyers : 

FHA Buyers 4 out of 10 new loans are FHA & rising. Approximately 160,000 buyers each month. 90 Day Seasoning Requirement: 1. Increased carrying & acquisition costs for investors 2. Limited the buying options for FHA buyers

FHA now on board : 

FHA now on board February 1, 2010: FHA Waives 90 Day Seasoning Eliminating the 90 day restrictions will: “help stabilize real estate prices” “offer more options to buyers using FHA” “will allow homes to resell as quickly as possible” This ruling dramatically increases our buyers pool by allowing FHA buyers to buy short sale flips and rehabs within 90 days.

Our business in 2010 : 

Our business in 2010 We buy short sale property. Make cash offers on overleveraged property. Make our case to the lender: “Why our offer makes financial sense”. Keep all parties informed: www.ShortSaleManage.com Provide several exit strategies for the homeowner. May buy and hold….May buy and rehab… May buy and quickly sell for a profit at higher price.

The Right Way : 

The Right Way Property under contract with homeowner. Full disclosure to seller- Signed Affidavit of Understanding Full disclosure to lender – Buy and resell for a profit. First transaction - Purchase with cash. If quick resale, a second and separate transaction. 2nd Transaction - Separate closing. Two distinct deals. SUMMARY: Two separate transactions. Full disclosure every step with all parties involved.

Slide 34: 

A Better Approach Recap of Realtor Benefits: Less time on ‘dead end tasks’ More time to develop business More closings More listings Higher earnings

Slide 35: 

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