Secrets of Short Selling Real Estate
Archives: Daily Issues
Issue #2120
- WEALTHY: How to turn no-go real estate deals into highly profitable ones (Dwan Bent-Twyford)
- HEALTHY: What’s the REAL fix for our broken healthcare system? (Jon Herring)
- WISE: Rig Veda on speaking persuasively
ALSO IN THIS ISSUE:
- What kind of friend are you? (Michael Masterson)
- 3 ways to make cold calling easier and more effective (Ilise Benun)
- It’s Fun to Know… the largest lake on an island in a lake on an island
- Add "eructation" to your vocabulary
Revealed: Probably the Biggest Red Herring in History!
While the world’s been stock watching (and losing!), the elite quietly play a different game with different rules…
Feeling cheated and disillusioned by the stock market? Sure, you may have made a good trade here… but then lost on another. The people dutifully pour their hard-earned cash into investment banks to put into the stock market for them… and those investment banks gladly oblige, for a fat fee… which they invest somewhere else! I’m no conspiracy theorist, but in my opinion the stock market is really a diversion for the masses… a distraction from where the BIG and consistent money is made… in the world’s money mountain. And when I say “Money Mountain,” I speak quite literally… the BIGGEST mountain of money on the planet. Click here to read more…
"One who talks sweet does not have an enemy and is blessed with plentiful of wealth and good fortune."
Rig Veda
Secrets of Short Selling Real Estate
As a real estate investor, you’re almost sure to make the most money when dealing with motivated sellers.
Sometimes, they just want to get rid of the property and are willing to sell it to you at a price where you instantly pick up a lot of equity. Other times, they need to sell quickly, but have little or no equity at all in the property. In other words, the difference between what the seller owes and what the property is worth is nothing or almost nothing. In some cases, the seller might owe more than the property is worth.
So how do you make money in a situation like that – where the seller has little, no, or even negative equity?
With a short sale.
A Short Sale in Real Estate Is Nothing Like a Short Sale in Stocks… and It Can Be Far More Profitable
A short sale in real estate is when you get the bank to accept less than what is owed on a property. For example: You find a homeowner in distress who owes $100,000 on a property that is worth $100,000. What do you do? Most investors would walk away. But by using the right short-sale techniques, you can get the bank to accept $55,000 as payment in full.
By doing that, you will have created equity in a deal that had none. The seller will be ecstatic, as he can now move on with his life. And the bank will happily take a defaulted loan off its books.
A short sale is a win-win for everyone involved.
The key to taking advantage of this strategy is to understand the dos and don’ts of working with a bank’s loss-mitigation department.
Making the Bank’s Loss-Mitigation Department a Friend, Not a Foe
As soon as your motivated seller is comfortable with you and your short-sale package, the time has come to work with the bank. So you make a call and ask for their loss-mitigation department. (In some banks, it will be called the work-out department, foreclosure department, short-sale department, loan-modification department, or reinstatement department.)
Once you have the bank’s rep on the phone, get to work. This person will make or break your deal, so be very nice. Your initial conversation should go something like this:
"Hi, my name is Sue and I am calling on behalf of Bob and Sally Smith [the distressed homeowners]. I have an ‘authorization to release information’ form I’d like to fax to you. What is your fax number? Great, I’ll send it right over."
Stay on the phone while the rep retrieves the form from the fax machine. When he returns, continue the conversation. It should go something like this:
"As you know, Bob and Sally are in foreclosure. I recently met them and they seem like sweet folks. When I found out about Bob and Sally’s dilemma, I said I’d try to help. They would like to sell their property and get on with their lives. I own several rentals in the area, and I am willing to purchase Bob and Sally’s property. However, we have a big problem.
"I called a real estate agent friend of mine and asked her to run comps for me. Based on her comps and what I know about the area, Bob and Sally owe much more than their property is worth. As I said, I’m willing to help them out of foreclosure – and help you get a defaulted loan off your books – but I can’t possibly pay the mortgage balance. Would you consider some sort of short payoff or something along those lines? Great! What do you need from me?"
By taking this approach, you will not come across as a professional investor out to make a killing on the bank’s loss. Many investors choose to present themselves that way, but I think you will have much more success as a friend trying to help Bob and Sally. (I certainly have.)
Use either approach – whichever one makes you feel most comfortable. But never lie to get the deal. Given the above scenario, for example, it would have to be true that I did recently just meet Bob and Sally… that I do have rentals… that I do have a real estate agent friend… and that I am willing to purchase Bob and Sally’s property.
In your conversations with the bank’s loss-mitigation rep, be certain to refer to your distressed homeowners by name as often as possible. This makes them seem more real. (Keep in mind that you are trying to build rapport with the rep – trying to get him to make an emotional as well as a business decision.)
After you send your short-sale package to the rep, call him at least once a day to follow up. Always ask him how the day is going, how the weather is where he is, how the kids are, and so on. You want the rep to look forward to your calls, not dread them.
Find out who makes the actual decision, how long it typically takes, how long the rep can give you to close once your proposal is accepted, etc. If you maintain a helpful attitude, your loss-mitigation rep will push it through quickly.
When your short-sale proposal is accepted, get it in writing immediately. Find a buyer for the property or arrange financing, and get the deal closed. You don’t want anything to happen between the bank’s acceptance of the short sale and the closing.
Once the deal is closed, send the rep flowers or a gift basket and write a letter to his boss saying how much you appreciate the professional way you were treated. The rep will remember you – and the next time you call about a short sale, he will be more than willing to help you again.
Loss mitigation: Friend or foe? I say friend!
[Ed. Note: Dwan Bent-Twyford is a full-time real-estate investor and a national speaker on short selling and creative real estate investing. Join Dwan for her teleconference this coming Wednesday, August 15th when she will reveal some of her most effective techniques for finding and closing short-sale deals. Phone lines are limited, so register now to assure your spot.
Are You Missing 90% of the Best Real Estate Deals on the Market?
Foreclosure investing can be a great way to build equity and wealth, but the great bargains are getting harder to find.
Why? Because thanks to a growing number interest-only loans, home equity loans, and falling property rates, an estimated 9 out of 10 homeowners have no equity in their home. In other words, 90% of the homeowners facing foreclosure today have little to offer an investor who wants to do a straight purchase.
But smart investors know a win-win-win technique that gives distressed homeowners a new start, bails the bank out of a bad loan, and scores you tens of thousands of dollars with little or no risk. Click here to learn how you can do the same.
Sincerely,
-Justin Ford
What Kind of Friend Are You?
Friendship counts. Whatever your life goals are, you'll achieve them faster and enjoy them more completely if you surround yourself with good friends - and if you yourself are a good friend to those around you.
Based on my experience, I'd say that a good friendship is a relationship of good intent. A good friend is someone who wishes you well, who cares about your problems, who enjoys your triumphs, and who will sacrifice for you. On the other hand, a bad friendship is based on taking rather than giving. A bad friend is one who just sees you as a resource, as a person he can get something from.
Here's a test that you can use to determine whether you are (or someone you know is) the right kind of friend or the "what's-in-it-for-me?" type...
How strongly do you identify with the following comments?
- "When I am introduced to someone, I am primarily concerned with that person's importance - financial, political, commercial, etc. - to me or my world."
- "If I meet someone who has nothing to give me or teach me - or who can't even amuse me - I act civilly but coolly."
- "The best thing about having friends is that they are willing to listen to my problems."
- "The next-best thing about friends is that they will do business with my honey/spouse."
- "Another value of friendship is that if I get into serious financial trouble, my friends will be financially capable of helping me out."
Rate yourself (or your friend) on a scale of 1 to 4 for each of the above statements, with 4 representing "strongly agree" and 1 representing "strongly disagree."
If you scored a perfect 20, consider yourself on your way to a major career in politics or Hollywood. (I'm guessing.)
If you scored a perfect 5, you will be happy for the rest of your life.
If you scored somewhere in between, decide for yourself which direction you want to move in.
[Ed. Note: Michael Masterson and his team of business-building and marketing experts will be revealing their strategies for getting a brand-new business of the ground... and making an existing business grow like crazy. Reserve your spot at this fall's Info Marketing Bootcamp- Making a Fast Fortune on the "Other Side" of the Internet - today.]
Preparing for Cold Calling
By Ilise Benun
You may hate the idea of cold calling, but you know it’s a good way to reach your best prospects. So you’re ready to hunker down and do it.
Here are the three things you need to have in hand before you pick up the phone:
- Two or three concise opening statements that say who you are, why you’re calling, and the connection between you and your prospect (if there is one). Experiment with these opening statements to see which makes the most sense, which is more comfortable for you, which flows easier. Then test each one during actual cold calls.
- Two or three questions you’d like answered. You may not get to all of them – but have them ready, in case the person you’re calling is open to chat and has the time.
- One or two closing statements that spell out what you will do next, what you’d like your prospect to do next, and what you expect to receive from and/or send to him.
Don’t forget to ask for your prospect’s e-mail address before you get off the phone. Because after you hang up, you’re going to send him a quick e-mail that repeats what you’ve just agreed to.
[Ed. Note: Networking expert Ilise Benun is the author of Stop Pushing Me Around. Get more networking strategies with Ilise's free e-newsletter, Quick Tips from Marketing Mentor.]
Don’t Take Health Advice From a "Sicko"
By Jon Herring
I applaud Michael Moore’s efforts to focus attention on our ailing healthcare system in his recent documentary, Sicko. And I agree with his premise that the system is seriously broken. But I take serious issue with his proposed "solution."
Moore’s solution for our broken healthcare system is to replace what we currently have with what amounts to socialized medicine: universal access and a single payer (the government). But he completely ignores what is REALLY broken – which is that the incentives are misplaced and the methods of care (primarily drugs and surgery) are often counterproductive to good health.
There is no incentive for the prevention of illness and the promotion of good health. The incentives in our system are geared almost exclusively toward managing sickness and treating disease. And the evidence that the methods we use to do so are antiquated and dangerous is right before our eyes. In fact, the healthcare system itself is the leading cause of death in the United States (according to The Journal of the American Medical Association), because of medical errors, infections transmitted within hospitals, surgical errors, adverse drug reactions, and more.
In a recent blog entry, Dr. Mark Hyman writes, "If we improve a broken system just by reorganizing how it is paid for, we still have a broken system." He goes on to say, "Until it is PROFITABLE for everyone to help create health rather than disease, we will not thrive as a society. Promoting and treating sickness should not generate more profit. Creating health should."
I couldn’t agree more. But don’t expect changes in this broken system. The drug companies like it just fine the way it is, and they have billions to ensure it stays this way. Instead, focus personally on the prevention of disease and care for your body by exercising consistently, enjoying sunlight frequently, supplementing your diet intelligently, and eating moderately and healthfully.
[Ed. Note: An investment in your health is the single most important investment you can make. And it can be surprisingly easy. Sign up for ETR's FREE natural health e-letter. Our panel of medical, fitness, and natural-health experts will provide you with practical strategies and real-world scientific discoveries that can help you melt off the pounds, pack on muscle, and eliminate the underlying causes of disease.]
It’s Fun to Know: The Largest Lake on an Island in a Lake on an Island
You may know that the largest island in the world is Greenland, and even that the largest lake is the Caspian Sea. But do you know the largest lake on an island? It’s Nettilling Lake on Baffin Island in Canada. Or the largest island in a lake? It’s Manitoulin Island in Lake Huron, also in Canada.
And if you’re a fan of obscure geographic trivia, you’ll really like this one: the largest lake on an island in a lake on an island is Crater Lake on Vulcano Island in Lake Taal on the island of Luzon in the Philippines.
(Source: elbruz.org)
Your Computer Sucks
No, I’m not being impolite. I mean your computer sucks your time, your money and your life away from you.
Drip drip drip… out it goes.
But now there’s a way to turn that flow around… to stop GIVING all the time and start GETTING!
Join hundreds of your fellow ETR readers who are making the switch over to The “Other Side” of the Internet.
- Patrick Coffey
Word to the Wise: Eructation
"Eructation" (ih-ruk-TAY-shun) – from the Latin – is a fancy word for "belch."
Example (as used by John Kennedy Toole in A Confederacy of Dunces): "Ignatius belched, the gassy eructations echoing between the walls of the alley."
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Michael Masterson
Copyright ETR, LLC, 2007
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