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What do the letters behind a real estate agent's name stand for? Real estate agents, like doctors, lawyers, and other professionals can ear designations, certifications, and other credentials. These are usually shown by putting a series of initials after the agent's name. The most common designations and certifications are: Broker, REALTOR, e-Pro, CHMS, GRI, ABR, and CRS.

What does an agent have to do to obtain the designation or certification?

e-Pro requires an agent take a class on basic computer skills. It has no real estate content, but ensures your agent can use email and the web. It should really be a bare minimum bar for the technology aptitude of your agent.

REALTOR is the one of the easier credentials to obtain (but one of the hardest to live up to). A REALTOR is a real estate agent that belongs to the National Association of REALTORS and agrees to follow the Realtor Code of Ethics. You can read about the code here http://www.realtor.org/mempolweb.nsf/pages/Code?OpenDocument

Broker is a bit harder to obtain than REALTOR. In Texas, for example, a broker license is required to be able to operate your own real estate company. An agent must have their license for 2 years and complete over 600 hours of real estate education prior to applying for a broker's license. The broker's license is granted upon completion of an exam administered by the state. Brokers are basically real estate agents with advanced educations.

GRI stands for Graduate Realtor Institute. Less than 50% of agents have this designation. The GRI requires 12 days of continuing education with passing grades on three exams. There are no production or time requirements so an agent can literally earn this designation by sitting in class for 12 days and passing the tests. This designation is in no way a measure of real estate sales experience.

ABR stands for Accredited Buyer's Representative. Less than 30% of agents have this designation. This designation combines 2 days of classroom work and an exam with the requirement that the agent show proof of at least five buyer sales. This designation shows that the agent has had both formal classroom time and in the field experience.

CRS stands for Certified Residential Specialist. Less than 4% of all agents have this designation. This is the most difficult designation to obtain and is a measure of a high degree of formal education and real world transactional experience. To obtain a CRS, the agent must attend three 2-day classes, pass three exams, and provide proof of 25 closed transactions within the last 24 months. While the transaction experience isn't a huge amount, it does weed out the inexperienced agents and the classes weed out those agents who aren't dedicated to continuing education.

Other designations are out there, but for the most part they are issued by inconsequential groups and have no real bearing on the agent's abilities and are used more for marketing purposes than anything else.

Heather Seitz asked:


When a homeowner becomes delinquent on their mortgage payments the lender begins the lengthy foreclosure process. If no attempts are made to reconcile the debt with the lender, then the property is auctioned off at the public courthouse. A single foreclosed property purchased at an auction can easily earn an investor a years worth of investment income. Right now is perhaps the best time in the history of real estate to invest in foreclosures with a record number of foreclosures reported last year. There are plenty of deals available to the general public but the trick is knowing how to find them

Despite what infomercials on television might tell you, investing in foreclosed homes is not as easy as just walking over to the courthouse. There is a lot of homework that needs to be done before a foreclosed home is purchased at auction. The key to successful investing, especially in real estate, is research. What you know can make all of the difference. If you want to be successful with foreclosures you have to be willing to spend some time doing some research

The internet has made performing research of any kind very easy. While researching a foreclosure online you can easily come across all kinds of valuable information. If you are going to be bidding on a property you need to know what the market value of the home is, and there are a number of free online services that allow you to research the market value of a house for free. However, in order to obtain the most reliable data on market values you will need to join a real estate membership site. A membership site will allow you to obtain up-to-date real estate information and foreclosures at a nominal fee.

Foreclosures have a tendency to be in a state of disrepair by the time they reach the auction block. Only a tiny fraction of foreclosed homes that reach the auction block are in move in condition. This means you need to be prepared to estimate renovation costs to the foreclosed property you are looking at. Unfortunately, many states prohibit you to enter a foreclosed home until after the auction is over. If you live in such a state you should consider speaking with a realtor in your area. Chances are a realtor will know someone who was involved in the foreclosure.

With a little research and patience you can easily find foreclosure deals at auction. But if you really want to make a profit with foreclosures you should consider investing in a foreclosure list service. Such a service will provide you with foreclosure deals as they come available and before they reach the auction block. The earlier you buy the property the better.



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Jeanette Fisher asked:


Many real estate investors make $5,000 to $10,000 or more by flipping houses. These investors buy a home from a distressed seller and resell it quickly for a profit. Just because a seller has serious problems like a pending foreclosure or divorce doesn't mean the house is a fixer. Many distressed sellers offer prime houses in perfect condition discounted for a quick sale.

Distressed sellers jump at the chance to get out from under their overwhelming problems with an offer to close in ten days. To purchase a home quickly, you need to be prepared to offer cash or a have secure loan in place with a reliable mortgage lender.

Other real estate investors prefer to buy fixers from distressed sellers. Distressed fixers present the best investment to make the highest return on your money. For instance, if you put 5% down on a $200,000 home, spend $5,000 fixing the house up, and another $3,000 in payments, your cash investment totals $18,000. If you sell the home for a $70,000 profit like many real estate fixers, you can see that your return on your investment of $18,000 for two months exceeds most other types of investments.

This investment plan assumes that you have the knowledge and skills, time to work on your fixer, and that you sell the house as soon as its finished to a qualified buyer. Home improvement centers help you with how-to classes, brochures, and advice. You need to give up your free time--TV, parties, leisure activities and work on your fixer. You could hire workers, but contractors and laborers work slowly and eat up your profits.

The last part of the equation, selling your house quickly to a qualified buyer means you need to do your homework. Many investors seek free help from a loan officer to price the house right and to qualify their buyers. These investors earn the sales commission by selling their houses by owner.

The most important issue, how you fix up your house, ensures that you quickly attract a buyer willing to pay top dollar for your transformed property. Investors using Design Psychology strategies for fixing houses sell their homes, for more than the asking price, three hours after putting the yard sign out.

Whether you want to make money investing in real estate by flipping or fixing houses, you need to understand your market. To get started in your real estate business, go house shopping. You'll soon learn how to pick up a flip or a fixer and be on your way to making a high return on your investment capital.

Copyright (C) 2005 Jeanette J. Fisher. All rights reserved



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Robert asked:


A lot of people these days are preaching about the buying and holding method of gaining wealth with real estate. There indeed may come a time in your life or business when you'll want to hang onto a piece of property, although you'll only be interested in keeping certain types of property. If you're just starting out, flipping a house may be an ideal way to get started.

Basically, there are three ways that you can flip a house, although each one has it's own terms, motivation, and type of property. The first method is known as retailing. What this means, is that you buy a house in bad shape, do the repairs to fix it up, then turn around and sell it. There are a variety of houses in need of repairs out there, and several ways that you can quickly flip a house to net profit. All you need to know are the techniques that will get you the most money in the least amount of time.

The second way you can flip a house is though wholesaling. Wholesaling involves finding a home for sale then flipping it to an investor for a fast, yet small profit. To do this, you'll need to know the real estate investors in your area, the types of homes that flip the best, and how to fund your property so you can flip it to them. If you live in a big area or a city, you'll find that using the wholesaling method of flipping houses is actually easier to accomplish.

The third way to flip a house is by assigning the purchase. Using this method, you'll commit to buy the house. Instead of closing the deal yourself, you'll assign it to a real estate investor - of course for a small fee. The investor will take the contract over and close the purchase themselves - flipping the house. This can be very profitable, especially if you invest in the right home. You don't need to have your contract worded any special way to be legal, although you will need to determine the assignment fee.

If you're looking to break into the real estate market and make big bucks, you'll need to learn all about flipping houses. Flipping houses is very profitable, especially once you have learned the basics. The first and third methods are the best, although they will both take quite a bit of work on your part. Restoring homes isn't easy, and you'll need to have a team qualified to handle any repairs. Assigning the purchase may be difficult when you first start out, although it will get easier with time. If you stay at it and do your best to make a profit - you'll be an expert at flipping homes in no time at all.



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Colin Egbert asked:


Investing in Foreclosures – Why do Short Sales?

If you're in real estate, or looking to get into it, investing in foreclosures can be very profitable, especially if you get that property while it’s still in pre-foreclosure. There are great benefits to investing in these pre-foreclosures through methods such as bank short sales and later on going to sheriff’s sales to pick up the foreclosure properties. In a way you are benefiting from the homeowner's loss. Many an unscrupulous person involved in real estate investing has even taken advantage of the homeowner’s predicament, giving foreclosure investing a bad reputation.

However, most investors involved in bank short sales benefit in the way that the Goodwill stores benefit from donations. The investor buys the property that the homeowner wants to get out from under. The same property that banks just don’t want to hold onto and resell it to interested buyers, with a bit of a profit built in so the investor can continue working and saving for their own future. There are benefits for all parties involved in these properly arranged pre-foreclosures deals.

Benefits for the Homeowners

If the owner does nothing, a foreclosure is certain, meaning that he or she is certain to lose the property and any equity that is built up in the property. In addition, he or she will also incur a myriad of other problems, including a severely compromised credit report that will take years to repair.

Therefore, when you talk to the homeowner about getting involved with bank short sales before foreclosure, you can explain that this will have the following benefits:

Protect their credit profile.

If they work with an investor, it might be possible to stop the foreclosure. This also means that they can start rebuilding their credit profile or at least stop it from deteriorating further. This is especially important because your credit rating affects everything from credit card rates, to property insurance rates, to buying a car or even finding employment.

They'll protect the equity they've built up in the home.

If a home is ultimately foreclosed upon, the homeowner will lose any equity they've built up in it. The investor may be able to recover some of the equity that the homeowner has accrued in the property and even prevent the foreclosure.

They can rebuild their life.

Being under threat of foreclosure is one of the most significant strains one can face. It can affect everything from mental state to job performance, as well as decision-making. If the foreclosure is stopped, the homeowner can at least breathe a sigh of relief and begin rebuilding their financial and home life.

Benefits for the Investor

You can significantly profit from bank short sales. It's also a great emotional boost to know that you can help someone move on with his or her life, stop foreclosure and the resulting financial difficulty.

Make a Large Return in Profits

Of course, as an investor, there has to be a profit involved or you will not benefit from this process yourself. You can purchase the property from the seller at a discount. Short sales tips always involve negotiating a good deal, but that’s not hard when the bank is willing to sell the property at below market value because they'll see that is to their advantage to cut their losses. When you rent or resale that property you can sell it for current market value and make a great return from investing in foreclosures.

Find Property in a Niche Market

You’ll have an easier time with your real estate investing if you start out with foreclosure properties. These properties are often less desirable than properties being marketed by real estate agents and they are cheaper. Plus, if you get into pre-foreclosures you’ll have less competition for picking up cheap property. You’ll be catching those properties before they get to the sheriff’s sale.

Super Motivated Sellers

It’s heart-breaking to see, but most homeowners with defaulted properties are very motivated sellers. By the time their bank files for foreclosure, the homeowner usually just wants to walk away from the property without fear of what will happen to their credit. Plus, you’ll be able to negotiate a great price on bank short sales because the bank just doesn’t want to own a property. They want to liquidate their assets and get out while they can too.

Benefits for the Banks

Believe it or not, the banks also benefit from short sale investing. They don’t want to hold onto that property. Any defaulted property is considered a non-performing asset on the bank’s books and affects their lending ratio. So just getting the property sold is a benefit for the bank.

Something is finally done about the mortgage

When the bank has a property mortgage in default they are require to reserve enough cash to cover that loan should the foreclosure go through and they aren’t able to recover their loan. Some banks may even keep as much as 8 times the loan in reserve. They can’t use that money as long as the mortgage is in default.

Frees up their reserve money

As mentioned above the banks must reserve enough money to cover the loan. If they can’t use that money that’s less money they have to invest for their own profits.

Saves time and fees associated with the foreclosure

By taking over the effort involved in putting together a short sale deal you’ll end up saving the bank a lot of effort in completing the foreclosure and managing the property if it doesn’t sell at the sheriff’s auction.

In the end investing in foreclosures provides benefits for everyone, all around the table. The homeowner gets a load off their shoulders, you’ll pick up a discounted property and the bank gets to improve their lending ratios. This is all because you decided to step in and help out with short sale investing.



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Colin Egbert asked:


Foreclosure Process – Information for Investing in Pre-Foreclosures

Every state and county has slightly different rules concerning the sale of pre-foreclosures and short sale investing, but there is a basic process that each follows. This foreclosure process takes quite a long time before a property is sold at the sheriff’s auction and even, in some cases, before the homeowners are evicted from the property. Yet, even so it’s still a good chance for real estate investors to pick up properties at a discount along every step of the way.

It Begins with Non-Payment

A lender is often a bank that lends the buyer money based on their job, down payment and credit history to purchase a home. In return the buyer agrees to a home mortgage with that bank to begin paying back the loan. The bank makes money because the loan accrues interest over the lifetime of the mortgage. The buyer becomes a homeowner and everyone is happy. Should the buyer turned homeowner stop paying back the loan through the mortgage, the bank has a safety net in being able to take ownership of the homeowner’s property.

This is called a foreclosure. The foreclosure is initiated by the bank when the homeowner has stopped making payments on the home mortgage. The bank may wait an extended period of time before beginning the foreclosure, allowing anywhere from 3 to 6 months for the homeowner to being making payments on the mortgage again. The bank would prefer not to take a property back in foreclosure. It’s a messy, lengthy process and the loss mitigation officers must consider property the bank owns to be a non-performing asset.

Property Enters Pre-foreclosure

A foreclosure is begun when the bank files a Notice of Default through a trustee with the County Recorder’s Office. This notice lets the county and the homeowners know that the bank is getting ready to foreclosure on their property. In short sale investing the home is now considered to be in pre-foreclosure. The pre-foreclosure period is also known at the reinstatement period in that it allows the homeowner some time to catch up their past due amount on the mortgage and keep their property. This amount of time usually lasts about 3 months.

During pre-foreclosure the trustee appointed by the bank, usually a local attorney, prepares for a foreclosure. The trustee makes every reasonable effort to contact the homeowners and let them know about the upcoming foreclosure. This can be done by posting the Notice of Default on their property, sending it in the mail and also placing it in the classifieds of the local newspapers. The trustee may also call the homeowner to see if they can work out payment arrangements to get the mortgage back on track.

If the mortgage loan isn’t brought up to date in this 3 month period the trustee files a Notice of Sale with the County Recorder’s Office. This Notice of Sale is also posted at the homeowner’s property and placed in the local newspaper classifieds.

Goes to Court

Some states require that the Bank go to court and sue the homeowner for their property as part of the foreclosure process. This process can further lengthen the pre-foreclosure period which is a good thing in short sale investing. The short sale process can be a little lengthy itself, so the more time you have to put together a deal, the better.

The bank’s trustee will have to notify the homeowners of the upcoming court date and ask that they show up. However, many homeowners fail to show up in court to fight for their property. This can be because they are ashamed or afraid. Some don’t know the laws very well and could even be concerned that they’ll be arrested for a bad debt.

If the homeowner presents a good case in court or even if the homeowners just show up and provide their foreclosure information, there is a good chance that the court will provide the homeowners with a few more months to try and catch up their mortgage or make arrangements.

The court may also decide to award the property to the bank, especially if this property has gone to court previously or the homeowner doesn’t even show up to state their case.

Foreclosed Property Up for Sale

After the bank forecloses on the property it goes to the Sheriff’s Auction, also known as a Foreclosure Sale or Trustee Sale. This auction can be anywhere from a few weeks to several months from the time the bank has foreclosed on the property.

There are several different popular methods for holding a Sheriff’s Auction, but the most popular is held right on the courthouse steps. The county clerk auctions of the foreclosures one after the other by property number to the public. The highest bidder wins that property. The opening bid on each property is often equal to the remaining loan balance that the bank is owed, plus interest accrued and any additional fees associated with the Sheriff’s Auction.

At this point, short sale investing is bunk. If you still want that property you’ll need to wear the hat of a foreclosure investor and get right in there with the bidding.

After the Sheriff’s Sale

If no one bids on the foreclosed property it is purchased by the bank’s trustee and becomes a bank owned property. It is called, ‘Real Estate Owned’ or REO at this point and usually sits on the banks portfolio until the bank can get it sold to a post-foreclosure investor.

If an investor bids on the property and wins it they are winning the Trustee’s Deed to the property. They become the owner and can do with the property as they wish.

Sometimes the homeowners may still be living in the property after it is sold at auction. In this case the new owner may wish to work out a rental agreement with the homeowners, or ask the homeowners to leave. If the homeowners refuse then the new owner must evict them.

The owner can file an eviction notice with the country sheriff and usually within a few weeks the sheriff comes out to forcibly evict the former homeowners. However, this happens several months to a year after the bank sent the home into pre-foreclosure. Most homeowners have plenty of time to make other arrangements and have either left or are in the process of leaving when the property is sold at auction.

The foreclosure process is a lengthy one, but it provides lots of time for short sale investing to take place before that sheriff’s auction.



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Colin Egbert asked:


Pre Foreclosure Lists: Lis Pendens or Notice of Default

Short sale investors frequently begin their deals by contacting the homeowners in preforeclosure. Yet, many new investors complain that they have no idea how to find these preforeclosures in order to make contact. Once you know how to find these homeowners, you’ll be surprised that so few investors work in foreclosure properties.

Lis Pendens and Notice of Default

When a homeowner’s bank files foreclosure papers, the homeowner is notified with a lis pendens or Notice of Default. They are different papers that mean basically the same thing; the bank is going to take the homeowner’s property for non-payment of the mortgage. A Notice of Default (NOD) is the form used in non-judicial foreclosure states, while the lis pendens is used in judicial foreclosure states where the bank has to go to court and sue the homeowner for their property.

The lis pendens is filed by the lender (bank) as a formal notice to the homeowner that the bank has started the foreclosure process. The homeowner still has the right to sell their property or even refinance that property during preforeclosure. A short sale is after all selling the property, it’s just that you are getting the bank’s agreement to sell the property for less than the mortgage is worth.

Once one of these two forms is submitted by the bank, the homeowner has a certain amount of time before their property goes to the sheriff’s auction. This amount of time varies greatly from state to state. It can be as little as 90 days or as long as 12 months.

You can identify preforeclosures, by looking for the lis pendens and NOD. All it takes is a little research.

Find Preforeclosures at the County Recorder’s Office

By law, the banks can’t release information concerning preforeclosures to those involved in short sale investing and real estate investing. So, the average investor has to look for these preforeclosures somewhere else. That place would be the County Recorder’s office. Any and all public documentation usually ends up in the County Recorder’s Office, also known as the County Clerk or County Record’s Office, this documentation includes copies of the NOD and lis pendens. These transactions are considered public record, including foreclosure filings, so you can simply head down to the records office to research preforeclosures that are suitable for a short sale deal.

Most County Recorders don’t put together lists of foreclosure information and their homeowner’s contact information for the convenience of the investor. So you’ll need to spend some time researching the records.

Short Sale Tips for the County Recorder’s Office:

If you search through the records looking for the NOD or lis pendens documents, you should have an easier time in your research.

By going down to the records office you are likely to get a head start on other investors, since not many people are willing to spend hours on their own research.

Take your reading glasses. You’ll be looking through a lot of documentation.

Going to the County Recorder’s Office is a FREE method for getting preforeclosure information.

Many County Recorder’s Offices have gone through the effort to put their documents online. This makes it so much easier when doing your short sale research. It never hurts to check online before heading down to the local records office, just to see if they have a website set up. Not all of these websites will provide you with the information you need. However, they should allow you to compile a list of names and document numbers that you can look up later on in the records office.

Short Sale Tips for Preforeclosure Research Online:

Try looking for a website. Many County Recorder’s Offices have websites where you can search through all of their documents.

When searching through a County Recorder’s online database look for the NOD or lis pendens as you would in the actual office.

Using a County Recorder’s website is also a FREE method for finding preforeclosures.

There are a couple of other ways you can find those potential short sale deals. You can subscribe to a preforeclosure listing service, either online, sent through email or as a newsletter in the postal mail. You’ll be one of possibly millions of other investors seeing these same properties so there may be competition for good deals. You can also scan the newspapers on a regular basis. Many counties publish their current preforeclosure properties in the classifieds. This is a last attempt to notify the homeowner that the property is going to a sheriff’s sale.

A short sale begins with contacting the property owners, but first you’ve got to find them. By researching both in the County Recorder’s Office and searching online you’ll be able to find more preforeclosures than you can handle. If these two avenues still fail you, you’ll also be able to find those properties through other means, like newspaper classifieds and subscribing to foreclosure lists.



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Robert asked:


A lot of people these days are preaching about the buying and holding method of gaining wealth with real estate. There indeed may come a time in your life or business when you'll want to hang onto a piece of property, although you'll only be interested in keeping certain types of property. If you're just starting out, flipping a house may be an ideal way to get started.

Basically, there are three ways that you can flip a house, although each one has it's own terms, motivation, and type of property. The first method is known as retailing. What this means, is that you buy a house in bad shape, do the repairs to fix it up, then turn around and sell it. There are a variety of houses in need of repairs out there, and several ways that you can quickly flip a house to net profit. All you need to know are the techniques that will get you the most money in the least amount of time.

The second way you can flip a house is though wholesaling. Wholesaling involves finding a home for sale then flipping it to an investor for a fast, yet small profit. To do this, you'll need to know the real estate investors in your area, the types of homes that flip the best, and how to fund your property so you can flip it to them. If you live in a big area or a city, you'll find that using the wholesaling method of flipping houses is actually easier to accomplish.

The third way to flip a house is by assigning the purchase. Using this method, you'll commit to buy the house. Instead of closing the deal yourself, you'll assign it to a real estate investor - of course for a small fee. The investor will take the contract over and close the purchase themselves - flipping the house. This can be very profitable, especially if you invest in the right home. You don't need to have your contract worded any special way to be legal, although you will need to determine the assignment fee.

If you're looking to break into the real estate market and make big bucks, you'll need to learn all about flipping houses. Flipping houses is very profitable, especially once you have learned the basics. The first and third methods are the best, although they will both take quite a bit of work on your part. Restoring homes isn't easy, and you'll need to have a team qualified to handle any repairs. Assigning the purchase may be difficult when you first start out, although it will get easier with time. If you stay at it and do your best to make a profit - you'll be an expert at flipping homes in no time at all.



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Colin Egbert asked:


In short sale investing, one of the biggest challenges you’ll face are negotiations with the bank. Putting together a short sale deal can be lengthy and involve a lot of preparation. Plus, you’ll need to work with the bank to come to a price you can both agree on.

First Contact on the Phone

You’ll start short sale negotiations with the bank by contacting their loss mitigation department. It can be difficult to make first contact with the bank. You may luck out when you first call, if you get an automated response system. Some of these systems will have you input the homeowner’s account number and the phone tree automatically directs you to the correct department.

If you don’t get lucky, your best bet is to call customer service and ask for someone who is qualified to make sales on pre-foreclosures or just ask for the Loss Mitigation Department. If you draw a blank with the person on the phone, try asking for the ‘foreclosures department’, ‘short sale’ department or ‘loan modification’ department. If all else fails try asking for someone in charge of loans and they might be able to direct you to the right person.

Always, always remain polite and calm on the phone. These are people you’ll be dealing with on a regular basis. Once you get that initial phone call out of the way you’ll have the right phone number and name to call every time from there on out.

After you get the right person on the phone, introduce yourself and explain that you are in short sale investing. Let the bank officer know that you are interested in a particular pre-foreclosure and would like to set up a short sale deal. It’s helpful to put together a check list of points you want to cover in introductions and even a short script that you can read from to introduce yourself. Practice the script so it sounds natural.

The Short Sale Package

At this point the bank officer should let you know what materials they’ll need from you to begin negotiations. These materials are sent back to the bank in a short sale package. This package is a way of providing the bank with all the foreclosure information they’ll need, your first offer on the property and is also a way of culling the serious investors from those just expressing interest.

In short sale negotiation, the short sale package is very important. One of the best foreclosure tips you can get for negotiation is to make sure this package includes all the materials the bank has requested and more. It often includes;

a hardship letter from the homeowners,

estimates for any needed repairs to the property,

your estimate of the property’s market value,

copies of the homeowner’s income tax returns and

most importantly your cover letter with your offer price for the property.

Banks will often set aside incomplete short sale packages when they receive them. You may not even be notified by the bank if your package is missing a certain document. So, be sure to double check that package before sending it.

Down to the Figures

Short sale investing usually involves a bantering about of numbers concerning the pre-foreclosure. When the bank receives your short sale package, they will order an appraisal of the property. This is called a Broker’s Price Opinion (BPO) and gives the bank a price to aim for in negotiations. It is usually completed within 10 days of the bank ordering an appraisal, but if they are backlogged it can take longer.

When the BPO is completed and approved the bank contacts you to negotiate a price on the property. The bank won’t tell you what their estimated BPO is on the property, but they will usually talk in terms of price range when negotiating.

The bank officer in a short sale investing deal will try to get as close to their BPO as possible. This doesn’t mean that they won’t accept a price lower than the BPO, they can usually take a deal that’s at least 83% of the BPO. You can usually tell how willing the bank is to accept your offer by the way they negotiate over the phone, especially if they call you back later to continue negotiations.

Your job in a short sale deal is to provide plenty of written evidence for your low offer and back up that information in negotiations. Real estate investing can be a great way to make a high return on your money, even more so when you get involved in short sale investing. However, you’ve got to convince the bank first.



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Colin Egbert asked:


When you work with the homeowner to put together short sale negotiations with the bank, you’ll also be assembling vital evidence in a short sale package. This package is very important in preforeclosure deals. It provides enough information to (hopefully) convince the bank to accept your short sale offer on the homeowner’s property.

Include everything you can in the short sale package that backs up your request for a short sale. Obviously, you’ll want to leave out extra evidence, (unless the bank specifically requests it), that may hurt your claim.

Common Items in a Short Sale Package:

Standard Purchase and Sales Agreement & Escrow Instruction

This is the standard sales contract between you and the homeowner, since you will actually be purchasing the property from the homeowner with the bank’s approval.

Authorization To Release Information

In order to get the bank to work with you, the homeowner need’s to sign this document stating that they authorize their lender, the bank, to share all vital information concerning their mortgage with you. If you don’t have this the bank won’t talk to you!

Letter Of Agreement and Addendum

This is the cover your butt document stating that you will work with the homeowner and the bank to stop the foreclosure, but you can’t guarantee that the bank will agree to stop the foreclosure during short sale negotiations with you.

Warranty Deed To Trustee

You’ll need to get a notary to authenticate this document. It basically shows who owns the property you are attempting to purchase.

Agreement and Declaration Of Trust

In order to keep your own name off of public records you’ll use this document to declare a land trust on the property, which you’ll have rights too.

Letter That Trustee is Making Payments:

This letter is used when you have an agreement with the homeowner that indicates you’ll be taking the property “subject to” and notifies the lender that payments will be coming from a trustee.

Escrow Letter

You’ll use this letter to tell the bank to apply funds in an escrow account to the loan balance when the loan is paid in full and the short sale deal is complete. Be aware there is no guarantee the bank will comply with the instructions for your real estate investment. They may send the escrow proceeds to the original borrower, which is the homeowner. So, you’ll need to make arrangements with the homeowner just in case this happens.

Special Power of Attorney

You’ll get this signed by the homeowner in front of a notary. It applies only to the property and lets you make decisions concerning the property if something happens to it before the short sale deal closes.

Residential Real Estate Disclosure

This is basically to protect everyone involved. You’ll sign it as the purchaser. It discloses any defects in the property and prevents anyone from claiming after the deal is completed that they weren’t aware of certain defects in the property.

Hardship Letter

This is a very important letter in pre-foreclosure investing. The hardship letter allows the homeowners to explain in detail all of the reasons they were unable to make payments on their mortgage and why they’ll be unable to completely pay off the mortgage. A good hardship letter can really help you seal the deal.

Financial Statement

This is basically the homeowner’s pay stubs, copies of their past income tax returns and other items that show the homeowners really are in financial hardship. The bank will absolutely want to see this proof of hardship before discounting a loan and taking a known loss.

Suggested Extras to Seal the Deal!

There are a few extra pieces of foreclosure information you can include in your short sale package to get the bank’s attention in this preforeclosure deal.

Cover Letter

The cover letter helps your short sale package stand out. It basically states who you are as an investor and that you are requesting a short sale. It also states why the bank should take the short sale. You can also summarize the major points of your package in this cover letter for the bank officer reading it.

Proposed Closing Statement (HUD1)

Eventually you’ll find that a bank requests the HUD1form. It shows all the fees and payments that will be made to the parties involved in the short sale. It helps them know their bottom line on the deal at a glance. Plus, it ensures the seller is not receiving any compensation.

Opinion Of Value

This can be a professional estimate or your own statement. You’ll back it up with a quick list of all the negative points of the property, its needed repairs and the lowest comparable sales in the area.

Estimate Of Repairs

If this property in pre-foreclosure needs repairs make sure you get estimates for all of them and include those estimates in your short sale package to back up your discounted price. Use the highest priced estimates you get.

Notice Of Trustee’s Sale

This is the notice that the homeowner receives telling them that their property is going to the foreclosure sale. By including this document in your short sale package you are letting the bank know that you are aware of the foreclosure process. It also helps put a timeframe on the deal and can light a fire under them, so to speak.

Color Photos

You’ll get extra points with the bank by sending them pictures of the damaged and neglected areas of the house. They provide photographic evidence of the low market value of the property and encourages the bank to accept your discounted offer.

The short sale package usually contains quite a lot of foreclosure information. In fact, it’s an involved process and essential part of debt negotiation with the bank. The bank will want ample evidence to back up your short sale request for their loss mitigation department as can be seen by the bulleted list. This package contains information that the bank requests from you and your own research on the property including; damage estimates and the homeowner’s hardship letter, all of which work to back up your request for a discounted sale price on the property.



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