Quick Cash and Short Sales

Hi, Dr. Allison As a former loss mit short sale rep, I dealt with these "bottom feeders" on a daily basis. The only way a investor will ever get a great deal like this is on will be on a very distressed, run down, not-the best-place- to raise your kids neighborhood- property. Why do these people think that the bank or the investor backing the loan would accept 65% of value. The bank would probably entertain an offer around $175-$180,000.00. The main problem with them is they go to the seller who is in foreclosure with promises they will "help" them. then when the bank rejects the offer they tell the seller "O we tried, sorry"

• IF IT LOOKS LIKE A DUCK
• IF IT WALKS LIKE A DUCK
• IF IT QUACKS LIKE A DUCK..... IT IS PROBABLY A DUCK!

There are a lot of greedy and unscrupulous companies out there doing this. I just had one that tried to get my seller to sign the deed over to them so they could be set free and they would handle the problem. Yeah, right. I spoke to the head guy of this company and told him in no uncertain terms would this happen and that I was going to report him to every legal entity I could to shut him down. He responded back with, oh well, I couldn't do this anyway because it's an FHA loan.

I still reported him to DBPR, Div of Real Estate, Chamber and everyone I could think of.

We are advocates of the public and here to protect them from fraudulent companies trying to make an illegal buck off of someone else's misfortune. The banks are getting hit hard too, which also affects the economy and our industry, so don't try to fool them - even if you can, it's called ETHICS and professionalism.

If you even mention the word attorney review to these companies, you'll never hear from them again. Wonder why that is? If you want to remotely try and make this work, make sure you have some really good E&O insurance.

There are loss mit companies out there that are upfront, legal and ok to deal with if you don't want to take the time to do the paperwork yourself (it is very time consuming) but using an atty would be the best choice as in some States, only attorneys can be paid for this type of service.

The worst thing that could happen is that these attornies may just call you when they have a short sale or foreclosure and recommend to the lender to use you to sell the house because you have ethics, and won't do dirty deals, even if it was negligence on your part, the law cause that "culpable negligence".

That means that maybe you didn't know what you did was wrong, but with your experience, license, etc.. YOU SHOULD HAVE. What I've seen is that agents don't mean to do harm, but they don't seek counsel from the right people. Still won't keep you out of trouble, and you could lose your license and harm families, banks, etc. It is not worth it to make a quick buck.

When in doubt, get an attorney involved is always my best advice.

It's not fraud. These are investors willing to take the risk for a return. Typically they are looking to purchase properties at 65% of the ARV (After Repair Value).

Example" $200k = value of home in good shape. $30k = cost of reapirs... ARV = $170k. 65% of ARV = $110,500.

The investor is willing to buy the home at $110,500, then they take the risk to resell at say $160k. The 65% buy amount covers their risk.

In doing this, they can either take title or resell the rights to buy the home and get paid the difference.

IMO, most of these won't make it for short sales as the lender isn't willing to approve the sale at that much of a loss. This technique works well for auctions and REOs.

Ray Paulk, LMC

Greetings Dr. Keith:

I am aware of these investros and their so called companies (fronts). I am also surprised by your broker's willingness to work with them.

I was approached by a good friend to attend a seminar two years ago when the market began to tank. It was the same exact pitch as Quick Cash. I did research and spoke with two real estate attorneys and they both said the same thing; it is illegal to short change the bank using a straw buyer.

It is fraud and several banks sued these front companies in the 80s. My friend has since left that organization.

Jeero

You are making an assumption that straw buyers are used. I am sure some do this - BUT there are many investment groups that are simply making a good investment when they see one...

There is absolutely nothing illegal or fraudulent about buying a home for a great price and re-selling it. No different than buying stock on the stock market and re-saleing for a profit within minutes, days, or years.....

Where investors and realtors go wrong is trying to unduly influence BPOs, use straw contracts, illegally or sneakily take title to a property, do not provide full transparencey to all parties from the beginning to the end, and do not fully fund with title insurance their purchase from the foreclosing lender(s) ------ That whole "simultaneous close" thing is not to be used!

If you are going to buy and re-sale a short sale - YOU MUST fully fund the transaction and provide COMPLETE TRANSAPARENCY. ....And you MUST never take title to anyone's property or promise anything regarding mortgage payments, money in the end....etc..... The transaction MUST be handled ethically and legally. There are, unfortunately, too many people out there frankly doing things WRONG.

We have personally purchased many short sale properties, our team has handled the listings, and we have re-sold for a profit.

We fully disclose to everyone - including the lender on the front that we intend to purchase and re-sale for a profit and the buyer we re-sale to that we made a profit.

All must remember that it is the Seller that chooses which contract they want to go with. If they choose an investor offer - well that is their choice.

From there - We let the lender make their OWN INDEPENDENT ASSESSMENT (BPO) of the property. If the lender chooses to approve an offer based upon their independent assessment that is below market - well,....that is their choice.

It is smart investing to purchase something below market that can be sold quickly at a price still below market but with the potential to make a profit. ---AND Yes, we always re-sale at or below market value with an appraisal contingency protecting anyone we re-sale too. They need to do their own due diligence and we will in NO WAY influence or share any information regarding the property's appraised value. They too must hire their own independent assessment and buy based upon their own evaluation.

Now -obviously NOT all situations, properties, seller needs, etc....meet the criteria for this type of transaction.

We have handled hundreds of short sales and only about 30% meet any investment criteria. The remainder are what we refer to as retail short sales - for which we only handle the negotiations. We do this for all states.

If anyone would like to know more - please call me

www.shortsalemanagement.com

770-966-7031

The Southeastern Group; Amy Ransdell

You people are missing the boat! I am both an agent and an investor. Although I have never heard of Quick Cash I am very familiar with this type of transaction. We disclose EVERYTHING to all parties involved. There is no fraud. We buy from the homeowner via the bank/short sale and sell (ASAP) to an end buyer. Our contract has a nonrecourse clause that prevents the banks from persuing the homeowner for any deficiency. If we are unable to make a spread we make every effort to sell the property directly to an end buyer. We will take a commission on a sale rather than nothing on a foreclosure. We have about a 70-75% success rate and have never left a homeowner hanging. If a home that we are unable to sell goes to foreclosure it is because the bank would not negotiate the price to market value. I understand that there are a lot of scams out there but this process is not one of them. A previous reply referred to us as bottom feeders. We actually cost the bank less on most transactions than a foreclosure. Think about the costs incurred for the auction, maintenance, holding, commission, vandelism etc. If we make 20-30k that's a lot cheaper than a foreclosure. As far as the quality of the homes, they range from tear downs to multi million dollar estates. I have not closed on anything over 500k but am aware of investors who have. If you choose to get involved make sure your homeowner is protected but do not shy away from this opportunity. You can double your commissions and sales. The average investor is as honest as the average agent. Don't lump them all into the catagory of scam artists.

James

Yeah!!! Finally an agent / investor making sense.

Why not earn more than the standard commission?

We work twice as hard as the standard team and create great results for all clients. The key - is full transparency and ethically remembering to do whatever we can to protect the seller in distress.

Thank you for being another voice of reason. Please read my last comment. We should team up.

Amy Ransdell; The Southeastern Group

www.shortsalemanagement.com

For "some" reason my gut is telling me that this sort of jargon should stay quiet.

If banks were doing something like this or had came up with an idea they surely wouldn't tell you. Of course, "If" and/or "when" they did a new REGULATION would almost certainly appear...this blog may bring the same to our side.

Remember...we're just a greedy "loser" at the end of the day if its ALL about us. HELP your clients!!!

Remember, most lenders feel like the borrower is lying to them if they default (especially stated income deals with pulled 4506-T's and liquid assets transfered to a daughter) so if they tell you verbally that they're "probably" going to "not come after your client"....get in writing something that says your seller/borrower/homeowner (I list & effectuate shorts) lender will be waiving all their rights to collect on any deficiency or money judgement pertaining to the subject property(s).

We usually amend the P&S before the lender reviews the deal.

Oh...

To answer the last question...

REGU-FREAKIN-LATIONS!!!

Brandon et al,

Why are people having trouble with this concept. These are investors taking a risk, and to me, not a bad risk. I just wish I knew how to do it better as I assume that one could loose their shirt if they were not careful.

In Massachusetts we have MassForeclosures.com designed to help these investors. I went to a meeting the other night and was fascinated. Could be a get rich quick or slow or loose, but it is a service, a good service for our industry. These are people we could/should be supporting.

Ray Paulk, LMC

I don't think most people would care if an investor came along and did what is best for the homeowner and make a buck. The problem lies in the fact that most people that are doing these types of transactions are not your "professional" investors looking for the right opportunity.

An investor that wants to engage in a purchase with a contract that lets them cancel at any time is not doing the best for that homeowner. They can leave the homeowner if they do not get all the ducks in row to make a profit.

Those types of predator investors is what is giving the whole lot a bad name. I'm in Florida, and these types of deals rarely benefit the homeowner who is relying on someone that is doing these deals to make a dollar, not save the homeowner from a Foreclosure.

For those investor that are going through with their promises and commitments...more power to you and thank you for keeping the lives of families you are touching as a priority.in your dealings.