Escolar Documentos
Profissional Documentos
Cultura Documentos
Using
“Short Sales”
Matthew Smith
www.shortsaledesmoines.com
October
2009
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Only Three Goals For Today
1) Educate agents on how to capitalize on
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Important Information!
What is Mid Iowa Negotiation Services:
Ø A short sale OUTSOURSING, negotiation
& consulting service
Ø A business that does NOT subscribe to Equity
Skimming
Ø Here to assist real estate agents with short sales
Ø Here to provide solutions and answer questions
Ø Over 6 years experience in short sales
Ø
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What is a Short Sale?
Occurs when a lender accepts less than
full payoff on the mortgage(s) to allow
transfer of a property to a new buyer.
Only available on houses in pre-
foreclosure.
Can be negotiated on all mortgages plus
junior liens.
Not available on bank owned houses
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Case Study - typical deal
Payoffs are at or more than the value
No equity in property when closing costs
and commissions are factored in
Homeowner in foreclosure
Homeowner wants to get out of situation
Realtor wants to outsource extra work
involved in short sale negotiations with
lenders.
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What if you could…….?
Case Study
The Foreclosure Crisis
Market Size
Working the Foreclosure Market
Short Sales: What, When and Why
Steps in a Short Sale – Flow Charts
How Short Sales Can Benefit You
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3015 E Porter – Case Study
3015 E. Porter – Case Study
The Foreclosure Crisis
Increase in the number of ARMs and rising interest rates:
– Nearly 25% of all mortgages – 10 million – carry
adjustable interest rates.
Source: Mortgage Bankers Association
First American Core Logic shows there are 2.8 million active
interest-only home loans worth a combined total of $908
billion.
The interest-only periods, which put off the principal payments for
five, seven or 10 years, are now beginning to expire. In the
next 12 months, $71 billion of interest-only loans will reset.
The year after, another $100 billion will reset. After mid-2011,
another $400 billion will reset. Source: NY Times
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The Foreclosure Crisis
7.8% of FHA loans at the end of the
second quarter 2009 were 90 days
late or more or in foreclosure
which
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The High Cost of
Foreclosure
The Foreclosure Crisis
"The biggest growth department in all
of the mortgage-lending servicing
departments over the last year has been
the loss-mitigation department. That is
the department dedicated to finding
solutions to defaulted loans other than
foreclosure” .
Source: Bruce Juenger, President of the Association of Real Estate Owned Managers in Los
Angeles
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Market Size - Nationally
Nationally 8.22% of all homes were
delinquent – at least 30 days behind
Nationally 3.85% of all homes were in the
foreclosure process in varying stages.
Sub-prime and FHA had highest %
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Market Size - IOWA
In Q4, Iowa reported 6.3% of all
mortgages were delinquent
Home Sales experienced a 13.87 YOY
decline from 2007
Home prices declined by 4.47% YOY
More and more foreclosures every day
Most foreclosures have no equity
Most homeowners are leveraged 100%
of value
Tougher and tougher to find listing
opportunities with equity
Enormous opportunity in pre-
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Working the Pre-foreclosure Market
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Working the Pre-foreclosure Market
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When Will a Lender Consider a
Short Sale?
Only on loans in default, or where default
is eminent.
When a lender receives an offer that is
higher than what it expects to net by
foreclosing.
When the type of loan, status of the
foreclosure and lender are conducive.
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Why Would a Lender Consider
a Short Sale?
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Steps In a Short Sale
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Steps In a Short Sale
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Risks for Agents
Waste time and energy on listings when
an acceptable discount could not be
negotiated.
Upset agents and brokers when they lose
a buyer because the process took too
long or the commission was reduced by
the lender.
Unable to find a buyer in time.
Negotiate a discount and have the buyer
not close.
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Risks for Sellers
The lender may choose to either:
– Seek a deficiency judgment against
the seller for the shortfall (HSBC)
– Send a 1099C for the shortfall,
creating a tax liability for the seller.
– IRS Pub 523
– Internal Revenue Code Form 982 Sec
121
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1099’s
1099’s
Deficiency Judgments
Real Estate Agent Mistakes
hardship package
BPO’s
Real Estate Agent Mistakes
full payoff
Rewards to Agents
Allows properties with no equity to be sold at
attractive prices in a short time.
There is less competition among agents for
properties that have little or no equity.
Allows you to earn full commissions on
sales that would have been lost without a
short sale.
Provides a way to help people in financial
difficulty who couldn’t otherwise be helped.
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Rewards to Agents
Easy to demonstrate benefits to sellers in
need.
Creates new opportunity in a growing
market with little competition.
You set the price where it will sell quickly,
since it is a forced sale, earning
commissions on sales you would not
otherwise make.
Receive strong testimonials and referrals
from people who couldn’t be helped by
anyone else.
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How Short Sales Benefit
Homeowners
Homeowners don’t pay for anything.
Sellers avoid a foreclosure on their credit
report.
Most lenders will waive their right to a
deficiency judgment as part of settlement.
Short sales minimize the loss, and
therefore any shortfall reflected on a
1099C.
Homeowners can often avoid paying
income tax on the shortfall when
professionally advised.
Allows sellers to get on with their lives!
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Key Points Covered
The Foreclosure Crisis
Market Size
Working the Foreclosure Market
Short Sales: What, When and Why
Steps in a Short Sale
How Short Sales Benefit You
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Questions?
To refer short sale business, please contact:
Matthew Smith
S & G Real Estate Investments, Inc
www.MINS.com
Office: (515) 988 -21287
Fax: (866) 800 -5042
Email: sandgrealestate@yahoo.com
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