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The Short Sale

During the years 2003 to 2005, lenders funded THREE TRILLION dollars in sub-prime loans.  To date, the rate of foreclosures is running 7% to 12% on many of these types of loans.  These figures forecast an estimated 1,500,000 loans for 2006.

When the pay rate increases on these loans, that rate of foreclosure will soar.

The average mortgage pay rate increase each year is 44%.  Add this to the increased cost of living, including gas prices and the average homeowner has a major problem.

TODAY THERE ARE OVER TWO MILLION HOMEOWNERS MORE THAN 30 DAYS LATE ON THEIR HOME LOAN.

Many of these loans are 90% to 100% loans made in areas where the value is depreciating.  Missed payments and legal fees will put many of these properties at 110% to 120% loan to value.  For these people, A SHORT SALE IS THE ANSWER.

Many investors have made a lot of money when they created a formula for buying problem residential and commercial properties often in foreclosure from owners at 20% to 30% under the market price when the loan is 10% or even 30% more than the market value of the home.

The borrower pays the Advanced Markets Group (hereinafter referred to “AMG”), a $1,500 retainer to get started.  This is non refundable.  In rare instances, a $750 retainer will get things started with the additional $1,500 coming in shortly thereafter. This will cover expenses after paying the “listing side” who brings in the client 50% of this.  Naturally, “the listing side” has the privilege of forfeiting their portion of this as a tool to get the listing.

The fee above this retainer is 2% of the sales price payable to “AMG”, by the escrow/title company at the close of sales escrow, IF AND ONLY IF THE SALE IS COMPLETED.  The broker commission is 1% of the sales price. The client must sign an escrow demand letter.

LOGISTICS OF A SHORT SALE TRANSACTION

  1. Identify Property
  2. Do a title search for liens.
  3. Identify investor and review property information.
  4. Have investor sign a contract and make payments of $750-$1,500 to “AMG”.
  5. Inform “AMG” of details on the property.
    1. Name of Lender
    2. Loan amount           $___________
    3. Estimated Value      $___________
  6. General condition of property and market condition in area.
  7. “AMG” representative to confer with investor.  If investor decides to continue with purchase—the following items are required:
  • Contractor’s estimate of cost to repair.  Be sure to note any mold.
  • Review of area problems that could affect value.
  • Appraisal of property—Noting A + B.  Now we have a sale price which the lender thinks they can list the property for.
  • Confer with “AMG” to determine what price to offer lender.
  • Write offer. Investor and seller to sign it.
  • Open escrow.  Prepare estimate to  H.U.D.  One showing seller is paying a sales commission of no more than 4% and there are no other expenses paid by the seller.
  • If there is a second, an offer to purchase that note must be made outside of the escrow. Sometimes, this must be through escrow with the holder of the first mortgage acknowledging this.  After review with “AMG” and in agreement with the investor, an offer to purchase the second will be made.
  • Have Seller sign “authorization to represent”.
  • Have Investor sign “authorization to represent”.
  • “AMG” will present all information to the lender to start negotiations.
  • Close Escrow.  Pay “AMG Escrow demand letter”.

  
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