Anyone investing in real estate foreclosures and distressed properties has come across one major problem--finding deals with equity! There are so many foreclosures out there. Unfortunately, most of the homeowners owe what their property is worth.
We find that most real estate investors walk away from deals with no equity. Either, they don't know what to do with a no-equity deal or they are unwilling to put forth the effort necessary to make the deal work. In situations like this, we discount the mortgage.
"What is discounting?" you ask. Also known as a "short sale," discounting a mortgage means getting the bank to accept less than is what is owed as payment in full. Here are several steps that will ensure your success when discounting mortgages.
Here is how it works: A homeowner calls and tells you he is in foreclosure; he owes $95,000 on his property; the house is worth $100,000; and he's eight months in arrears. He wants to move on with his life, but he can't sell his house because he owes what it's worth.
Here's where you come to the rescue. You meet with the homeowner and have him sign:
An "Authorization to Release" form (this gives the bank permission to speak with you about the account)
A sales contract for the amount you are willing to pay for his property. In this scenario, we are going to offer $50,000
Next, you call the bank and ask for the Loss Mitigation Department. This is the department that handles properties in foreclosure.
A win/win solution
This is a typical case where having a firm grasp on creative real estate investing enabled Cathi to turn a "nothing deal" into a "something deal" just by picking up the phone. She made money (and a lot of it) on a deal most investors would have passed by.
The bank was happy with the discount, Cathi made $10,000, and her friends bought a home with $60,000 equity!
So, the next time you get a call from a distressed homeowner with no equity, what will you do? Walk away or make a few simple calls and turn your time into cash?
We certainly hope you will make the small effort it takes to do a few short sales. It's such an easy way to make money in an industry where great deals are tough to come by.
With short sales, not only are you helping yourself; you are helping distressed homeowners and giving them the chance to start over. You can't go wrong!
To contact Derrick Hibbler send a comment below or call 314-246-9484 :voice or you can email him @ dhibb99@gmail.com
No comments:
Post a Comment