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Sat. Morning Conference Call with Bill

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing Sat. Morning Conference Call with Bill

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  • #5635
    Avatar of homesavers
    NULL
    Member

    re: Short Sale flips. I was on the call last Saturday and Bill was explaining the commission payouts for the listing and buyer’s agent portions. I understood this I know Bill has figured out a way to do this without having a RESPA violation. However, when Bill said “we find a buyer willing to pay 95 percent of value” he lost me. I did not continue on the call after that so I may have missed something.
    How in blazes can we realistically find a buyer willing to pay 95 percent of value for a house coming out of short sale??????????? David has a good auction solution but the buyer’s are not going to buy the property at 95 LTV- no way. Help me folks I must be missing something here!!!

    #29392
    Avatar of kevinscott
    Kevin Scott
    Member

    This is not baffling (I don’t think).
    1. House for sale has loan against it of $300k.
    2. Current TRUE fair market value of $100k. (hence, short sale)
    3. Outside short sale negotiators gets bank to accept offer of $60k.
    4. Outside investor pays CASH to buy at $60k.
    5. End Buyer who lives in the house buys it for $95k.
    6. End buyer still saves $5k off TRUE fair market value of $100k.

    ******
    Speaking of baffling, I was on the call and I raised my eyebrows at 2 other occurances…

    (1) In Q&A, lady was raving about the wonders of PRODUCE THE NOTE,
    and I believe I heard her say “it WORKED for her”, and she got her house “FREE & CLEAR”. I dunno. Maybe I’m mistaken. Based on what I know (which is limited), a true NOTE RECISSION takes TIME, and MONEY.
    Even when a lender gets BEAT DOWN in court, and a JUDGE actually issues a COURT ORDER TO RESCIND, there’s the business of returning parties to their original condition where buyer gets refund of all his payments made, AND IN TURN, borrower must return back some kinda cash for the loan they got (the technical term escapes me at the moment). In effect, the rescinded home loan is no longer enforceable, YET, borrower must do some kinda work out with lender to eventually capture the deed to the home.

    Lot’sa technicalities. It’s a little bit more than “it WORKED for me!”.

    Certainly filings to make the bank produce the ORIGINAL DOCUMENTS with the original ink and the original DNA of the bank representatives, borrowers etc. works well to STALL foreclosure (perhaps indefinately?),
    but the lady on the call seemed to suggest (to my ears) that it was a snap. Heck, I’m uncomfortable even typing all this discussion as this stuff is far afield from PACTrust / NEHTrust.

    (2) Another Q&A dude suggested that when on the phone with the lenders Short Sale Negotiators, simply offer to BUY THE POOR PERFORMING NOTE DIRECT FROM THE LENDER. Dude suggested (at least to my ears) that this is STUPID-EASY. Lol.

    Mr. Bill was like “all ears” to this concept, especially as it was laid out by Rafael (I suddenly remember his name). Scott Moyes has discussed this issue previously on this board. My limited experience actually being on the telephone with lenders is that they don’t often have the AUTHORITY nor DESIRE to be sellin bank notes ONE-BY-ONE like that. Rafael suggests it’s a PIECE OF CAKE. In fact, I think dude said “I’ve bought notes like that from the bank myself-what’sthebigdeal”. Maybe I heard wrong.

    Man-o-man, I left that call thinkin I’m the dumbest guy on earth for making stuff complicated, when I could be doin EASY STUFF like Produce The Note, and buyin notes one-by-one (with a money partner). That’s my two cents.

    #29393
    Avatar of homesavers
    NULL
    Member

    Well I am going to get more Sellers to sign my Option and test market to find these buyers. If they are there I will see if I can direct them to the properties that I have under contract versus the other ones out there. It seems to be doable in theory but has anyone here besides Scott and Dave have any success with this? It is not a new method so it should have a track record with NARS folk.

    #29394
    Avatar of homesavers
    NULL
    Member

    @KevinScott wrote:

    This is not baffling (I don’t think).
    1. House for sale has loan against it of $300k.
    2. Current TRUE fair market value of $100k. (hence, short sale)
    3. Outside short sale negotiators gets bank to accept offer of $60k.
    4. Outside investor pays CASH to buy at $60k.
    5. End Buyer who lives in the house buys it for $95k.
    6. End buyer still saves $5k off TRUE fair market value of $100k.

    ******
    Speaking of baffling, I was on the call and I raised my eyebrows at 2 other occurances…

    (1) In Q&A, lady was raving about the wonders of PRODUCE THE NOTE…

    (2) Another Q&A dude suggested that when on the phone with the lenders Short Sale Negotiators, simply offer to BUY THE POOR PERFORMING NOTE DIRECT FROM THE LENDER.

    Number 1: This can be done if you know what you are doing and they do not have the original signed paperwork. I actually have all the material for this method but I have not used it because I am not an Attorney and if you miss one thing your whole case can blow up.

    Number 2: I bet the guy was talking about smaller banks and private lenders. Alot of the large banks sliced up the loan so much (derivatives) that there is no single investor to contact.

    #29395

    On Finding the Short Sale Property:

    If an outside Investor purchases the Property at 60% of the $100,000 FMV and
    “we find a buyer willing to pay 95 percent of value” ;

    Is there any room left for the person that finds the Short Sale, in this $35,000 example spread, after other costs and Profits to others, to make anything ?

    Thanks,
    Alan

    On Finding the different Buyers:

    P.S. and when we say, ” we find a Buyer “;

    There are two Buyers: an Outside Investor and an End-User.

    On the End-User: Who is “we ?”

    I’m wondering about what goes on with us compared to those that are Realtors.

    Thanks again.

    #29396
    Avatar of bill_gatten
    bill_gatten
    Participant

    @homesavers wrote:

    I understood this I know Bill has figured out a way to do this without having a RESPA violation. However, when Bill said “we find a buyer willing to pay 95 percent of value” he lost me. I did not continue on the call after that so I may have missed something.
    How in blazes can we realistically find a buyer willing to pay 95 percent of value for a house coming out of short sale???????????

    @KevinScott wrote:

    This is not baffling (I don’t think).
    1. House for sale has loan against it of $300k.
    2. Current TRUE fair market value of $100k. (hence, short sale)
    3. Outside short sale negotiators gets bank to accept offer of $60k.
    4. Outside investor pays CASH to buy at $60k.
    5. End Buyer who lives in the house buys it for $95k.
    6. End buyer still saves $5k off TRUE fair market value of $100k.

    ******
    Speaking of baffling, I was on the call and I raised my eyebrows at 2 other occurances

    (1) In Q&A, lady was raving about the wonders of PRODUCE THE NOTE,
    and I believe I heard her say “it WORKED for her”, and she got her house “FREE & CLEAR”. I dunno. Maybe I’m mistaken. Based on what I know (which is limited), a true NOTE RECISSION takes TIME, and MONEY.
    Even when a lender gets BEAT DOWN in court, and a JUDGE actually issues a COURT ORDER TO RESCIND, there’s the business of returning parties to their original condition where buyer gets refund of all his payments made, AND IN TURN, borrower must return back some kinda cash for the loan they got (the technical term escapes me at the moment). In effect, the rescinded home loan is no longer enforceable, YET, borrower must do some kinda work out with lender to eventually capture the deed to the home.

    Lot’sa technicalities. It’s a little bit more than “it WORKED for me!”.

    Heck, I’m uncomfortable even typing all this discussion as this stuff is far afield from PACTrust / NEHTrust.

    (2) Another Q&A dude suggested that when on the phone with the lenders Short Sale Negotiators, simply offer to BUY THE POOR PERFORMING NOTE DIRECT FROM THE LENDER. Dude suggested (at least to my ears) that this is STUPID-EASY. Lol.

    Mr. Bill was like “all ears” to this concept, especially as it was laid out by Rafael (I suddenly remember his name). Scott Moyes has discussed this issue previously on this board. My limited experience actually being on the telephone with lenders is that they don’t often have the AUTHORITY nor DESIRE to be sellin bank notes ONE-BY-ONE like that. Rafael suggests it’s a PIECE OF CAKE. In fact, I think dude said “I’ve bought notes like that from the bank myself-what’sthebigdeal”. Maybe I heard wrong.

    Man-o-man, I left that call thinkin I’m the dumbest guy on earth for making stuff complicated, when I could be doin EASY STUFF like Produce The Note, and buyin notes one-by-one (with a money partner). That’s my two cents.

    Kevin, my friend, I’m a little surprised at your condescending tone here, but to clarify…

    Profiting in the short-sale market is not “far afield” of the NEHTrust(tm) and the PACTrust(tm). We are in the business of making money for our students and clients, and are always willing to explore new ideas whatever they might be, if they are honest, legal and ethical. The investor who separates the co-beneficiary land trust transfer from other real estate opportunities is probably not going to attain any seven figure wealth right away (unless you count the decimals).

    On the subject of demanding a lender’s production of the note, I personally know of no cases where a borrower got his house free and clear because of a forensic audit and didn’t think it happened all that often (as I stated on the call and was promptly corrected). However, “Sharon in Las Vegas” said she had seen two of them happen. It would not be in my nature to call her a liar, even if I thought she was misstating the truth (and I have no reason to think she was). You may have noticed that I didn’t permit her to continue advertising on our call. Whether she has seen these things happen or not is none of my business…personally, I have not seen it happen, but have heard the hype relative to it.

    But do consider the fact that regardless of the time, legal hassle and expense involved, an attorney’s getting his client’s house paid for free and clear (while the client is making no payments) would probably have little trouble covering the costs and getting paid well for his services.

    Next, regarding getting the note…I do know of a few occasions where investors have been able to buy individual defaulted notes from banks, but doing so is most unusual because, as you quite ably point out, the people you talk to within the lending institutions most often don’t have the authority or first-hand knowledge of policy to say “yes” to anything much. And those who do have the authority are the Note Department managers who are responsible for the hidden and unreported defaults (i.e., hidden to avoid posting full reserve) who are dealing with multi-million-dollar portfolio tapes.

    These note folks are simply not interested in allowing cherry-picking by a onseys-and-twoseys-minded investor. But again, I felt that Rafael’s idea might be worth pursuing with some of the private lenders in California and elsewhere who do maintain their own loans (such as the few that I deal with on a regular basis). The single call I made to one of them was productive, but they have to contact their investor (private) to assure that he wants to bail-out with a deep discount (a small and limited operation).

    About six or seven months ago, when looking for defaulted mortgage tapes (for a now defunct “tape buyer”), I spoke with a small lender in Hawaii who would have gladly sold the two defaulted notes they had (2 out of a total of 30 mortgages), but the discount wasn’t attractive enough, given the distance and the amount of salt water between us.

    Now… What has any of this to do with anything? Just remember this:

    “Failing to investigate the merit of a stupid idea has been the downfall of many a stupid person.” (The reference is to me, Kevin, not you)

    Bill

    You can use the quote, but I want a royalty… I’ve made a small fortune on the royalties I receive from insurance agents for my most famous phrase: “God forbid!”

    #29397
    Avatar of homesavers
    NULL
    Member

    @KevinScott wrote:

    This is not baffling (I don’t think).
    1. House for sale has loan against it of $300k.
    2. Current TRUE fair market value of $100k. (hence, short sale)
    3. Outside short sale negotiators gets bank to accept offer of $60k.
    4. Outside investor pays CASH to buy at $60k.
    5. End Buyer who lives in the house buys it for $95k.
    6. End buyer still saves $5k off TRUE fair market value of $100k.

    Kevin what is baffling are points 5 and 6. If you have X amount of Bank Owned properties and Y amount of Short Sale properties in the same market what do you think the end buyer is going to buy? The REO or the Short Sale? The REO is direct from the Lender at lower price. The Short Sale has us in between the lender and the end buyer. Our middleman profit has got to increase the price higher from an REO. Don’t you think? Scott says 8 percent of short sales turn into closed deals. That leaves 92 percent of these properties going to REO. Also some owners just walk away with a “cash for keys” deal. My co-worker got 5 Grand for signing his property to the bank and walking away.
    There many things we can do with the NARS EHT but we have to be realistic with the market we are working in.
    So the question is is anybody finding buyers for short sales out there? If so what can of loan is that buyer getting? Sorry the numbers are not working out for me. I am going to work on short sales and REO’s at this point but I want to make sure there are buyers for the short sales.

    #29398
    Avatar of corkhorner_2
    corkhorner_2
    Member

    HomeSaver et al
    Once upon a time, in a far off land ; 1963 and a place called Minnesota; there was a 26 year old pizz’n'vinegar broker/investor who: in addition to his own cre deals sought out deals for others that fell out of bed and then close them.

    When i look in the mirror, I think I recognize him. but, he had hair then.

    what has changed? NOTHING. Just different tools, different people and different global problems.

    To me, as long as we have an America, as long as we have a ‘free’ society, as long as people eat and sleep there will be a residential re market? Yes? It may change drastically but then, why not just go with the flow?

    For those who have invested in the Dale Carnegie Sales Training, they learn the power of “if i could ………would you be interested?”

    None of this means I write killer apps in EHT. It does mean that I look for MOTIVATED sellers, MOTIVATED tenants/buyers and then find where I can apply transaction coordinating/engineering. Do some crash?,,,,yuppers. So what.

    My team works probate, loan mod, rehab/remodel and wholesale flipping.
    From time to time the ball falls in the right hole.

    There are about 20,000 homes in SD COUNTY typically on the market.
    Room for deal making?

    If/when one finds motivated transactions magic happens with funders and solutions. SM and Magic Dave are proof of the pudding.

    In my view, these are challenging and trying times. Even ‘O’ doesn’t have all the answers. But, I think it is important to keep in mind ‘The Great Depression’ created many millionaires in innovative re. WHY not?

    Thank you for listening.

    Keep On Keeping On, [USAF says Press On],

    c h

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