High Road to Huge Foreclosure Profits. Buying foreclosures can be extremely profitable for real estate investors. However, most of these homeowners are mortgaged to the hilt. They have no equity, and big loan payments. In fact, many actually owe more than the property is worth!

Most investors will walk away from these deals because they see no obvious profit. However, you can create? Your own equity by negotiating a Short Sale with the bank or lender.

What is a Short Sale?

The concept behind the short sale is simple: your goal as a real estate investor is to convince the bank to sell for less that is owed as payment in full. Of course, this concept is easy - buy the foreclosure from the bank at a big discount, sell the real estate, and make money!

How to Negotiate the Short Sale with the Mortgage Holder

Once you have your secured a contract with the homeowner and have your paperwork in order, you’ll be ready to deal with the loss mitigation department of the bank. Short Sales success relies on dealing with the loss mitigation department at the bank. Although most lenders look at short sales as a necessary evil within the lending industry, that doesn’t mean that the bank will just roll over and do your bidding.

Understand the Bank’s Perspective

With foreclosures at a 52-year high, the loss mitigation department at the bank is busy, if not highly overworked. Turn this disadvantage into an advantage - sell them the benefits of your short sale.

Short sales contracts help lenders unload unwanted property and spare many expenses associated with the foreclosure process. These expenses include, but are not limited to, court costs, bankruptcies, repairs and marketing. This is in addition to the $300,000 to $800,000 (or more!) normally held in reserve by lenders. Federal regulations require this reserve, which is usually many times over the actual price of the bad debt.

As the investor, keep these benefits at the top of your mind. After all, it’s up to you to convince the lender that cutting their losses short is the best option.

It’s time to hone your negotiating skills. Here are 3 Steps to help you out.

Step 1: Have Your Paperwork Ready

There is paperwork that all lenders will require in order for you to submit your offer for the short sale. Second, many of the larger institutional lenders have their own short sale package (their own forms to be filled out and signed).

Since many of these forms have to be signed by the homeowner(s), it’s best to have them with you when you meet with the homeowner to work out a deal. At a minimum you should have the homeowner fill out and/or sign:

? Authorization to Release Information (homeowner’s permission for the bank to speak to you)

? Purchase and Sale Agreement

? Hardship letter (showing why the homeowner can’t make the mortgage payments)

? Financial statement (showing the assets, liabilities, incomes & expenses)

? Estimated HUD1 or Net sheet (showing the bank what they will get)

Second, find out if the lender has a package they want completed. You can do this usually by calling the lender and asking them to fax you the package. Get the lender information from the homeowner in a phone call, so you can get the package before you go out to the house.

Step 2: Approaching the Loss Mitigation Department:

One of the first challenges you’ll face with the bank is getting your call to the right person. Some banks have systems set up in a way that when you call put in the homeowner’s account number, the call transfers to the appropriate department.

If the bank doesn’t have a system like this, call around to find the Loss Mitigation Department. Many banks have different names for this department, so you may spend some time getting bounced around. Other names to try out are ?foreclosures department?, ?short sale? department, or ?loan modification? departments.

Make sure you introduce yourself and be nice, polite, and patient when you reach the right person. This is the person that can make or break your deal. It’s helpful to have some form of a script in front of you to get the conversation.

When you speak with them, make sure you cover the following:

? Introduce yourself.

? Name the homeowner, the account number, and the fact that you represent them.

? Ask for the fax number.

? Let them know you’re faxing over an ?authorization to release information? so that the loss mitigator can talk to you.

? Stay on the phone as you fax this information.

? Explain to them that you’re interested in a short sale.

Once they have the paperwork in front of them, the negotiations begin.

Step 3: Begin Your Negotiations

Every bank has its own personality and approach when it comes to short sales. Some teach their employees to at least show resistance up front. One reason for this is that many investors call them expressing interest in a short sale, with no clue how to do it! These loss mitigators usually have about 80 to 300 files on their desk. They just don’t have the time or desire to teach you! Let them know you don’t need them to!

Many new investors have been advised to not reveal that they intend to invest in a property. However, it is better to be upfront and let them know that you are an investor, and you are buying the property.
Being honest and upfront allows both parties know what is required of them, and what needs to be negotiated.

While speaking with a loss mitigator, make sure to emphasize the following points:

1. You’re an investor and you know what you’re doing. Although you do want to make profit, let them know you’re not out to steal the property from them.

2. You understand that they are busy and appreciate the valuable time they are spending to negotiate with you. Find out what will make it easier on them.

3. Remember your selling points. The bank wants to avoid the homeowner filing bankrupty, and the bank needs to unload unwanted property without taking a huge loss. (And yes, while you are in it to make a profit, you’re not trying to rip them off! You’re just trying to use your expertise to do what you’re good at.)

4. A short-sale is a win-win situation for everyone!

Once you have spoken to the loss mitigation department and given them your paperwork, the lender will need information about the property, the borrower and the deal that you are proposing. If the person you are speaking with tries to test your resistance, make sure you answer as many questions as thoroughly as possible to let them know you are a professional. Hang in there, answer and ask as many questions as possible, and they’ll be more apt help you out along the way and walk you through what it is that you need to do.

The most important fact that the broker needs to know is: How much is the property worth? Banks usually hire a real estate broker or appraiser to evaluate the property. This is called a broker’s price opinion or ?BPO?. The BPO is one of the largest hurdles you need to clear when perfecting your short sale negotiations. In the next article, you’ll learn the in’s and out’s of the BPO and how to negotiate the BPO down to create profit for your short sale.

Richard Odessey along with his wife Michelle are founders of the premier site on the internet - http://www.InvestorWealth.com for training and teaching real estate investors to do high profit deals. They offer regular Free Teleseminars by the top real estate investors in the country and offer how-to tools and kits like the Deal Evaluation Tool (http://www.1shoppingcart.com/app/adtrack.asp?AdID=143414) to help investors to faster and greater real estate success. They also offer 4-8 hands-on training seminars with personal advice from experts that investors can take from the comfort of their home. Richard and Michelle have been investing for over 5 years and personally teach and mentor other investors.

This article may be reproduced in its entirety only if unaltered and the resource box is included.

Foreclosure Investing in Baltimore for Pennies

Short sales are becoming more and more popular as more and more
investors learn this creative technique which can create huge profits.

Baltimore Real Estate 10 Way To Buy With No Money Down
Check the Television on any Sunday morning and you’ll see yourself in the …..

A short sale is when a lender accepts a discount on a mortgage to avoid a
possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are
purchasing the property directly from the lender for a discount.
For example: A
homeowner, who is facing foreclosure, has an existing first mortgage of $300,000.
You write an offer to the lender for $220,000, which is accepted as full payment for
the loan. This is a short sale. Why are they willing to take such a discount? Several
reasons. First of all, banks do not like excess inventory and bad loans on their
books; therefore, if they see an opportunity where they can sell the property without
a huge loss, they will do it. Secondly, lenders know they could lose a lot more
money if the property goes to auction. There are so many fees involved if the
property goes to auction, that they would be better off taking the discount
beforehand and be finished with the headache of it all.

Foreclosures are spreading all over the country, which means there are
opportunities everywhere. Lenders are being overwhelmed with properties they
inherit because of bad loans. It is safe to say that most lenders will accept a short
sale, however, you may come across one or two who will not discount. If the
numbers work out for the lender they will do it.

It is best to do a short sale when the property is in the pre-foreclosure
state. Yes, you can perform a short sale when the bank owns the property, however
your profits will more than likely be smaller. There are two stages within pre-
foreclosure. The first stage being those individuals who are behind on payments and
the second stage are those who are behind on payments with a notice of default. In
order for this to work properly and for you to successfully get a short sale, you must
find the homeowners who are in the second stage of pre-foreclosure or more than 3
payments behind on their mortgage. Once the notice of default has been recorded,
banks become motivated as well, so you are more likely to get a discount. Until that
time, very rarely will a bank ever discount a mortgage that soon. Why would they?
The homeowners still have time to cure the loan and make up the back payments.

It does not matter what type of house or condition it’s in, all mortgages can be
discounted. Because of this, short sales are one of the most effective
techniques for discounting loans in real estate. Short sales create huge
investment opportunities and are a must if you want to be competitive in this
market.

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History again and again serves to show us that the real property market is cyclical. It has boom times and …..

One of the most important steps in the short sale process is getting the
deed. Too many times, beginning investors will skip this vital step. Why do we want
to get the deed from the homeowner(s)? Because all too often, homeowners change
their minds, or want to back out of deals because they are scared, or they want to
re-negotiate. Without the deed, they can back out of the potential short sale even
after you have spent hours working on their property. When the homeowner signs
the deed over to you, now you control the property (subject to) and you can go to
work by calling the bank.

There is a certain process for calling the bank when you’re doing short sales. Banks
can usually tell if you’ve never done this before. When you call the bank, you
never want to tell them you are an investor. This one of the biggest mistakes
rookies make and sometimes will result in the lender not accepting a short sale.
Therefore, when you call the lender to request the short sales packet, you want to
tell them you either represent the homeowner or you are the buyer. Sometimes they
may ask if you are an attorney. Again, just tell them who you are - do not use
“investor”. Then you’ll want to request the “short sales packet” or “workout packet”.
When the packet arrives it will explain exactly what you need to make this short
sales deal successful.

The lender will usually request a hardship letter, a HUD-1, and a financial statement
from the homeowner. A hardship letter is telling the lender why the homeowners are
not making their mortgage payments. Sometimes they will request bank statements,
pay stubs, income statements, and so on. Be prepared to send them
everything they ask for because if you don’t, your short sale will not be
accepted. Do not waste any time! Send everything the lender asks for back ASAP. It
usually takes at least 3 weeks or more to get an answer back from the lender, so
you can’t afford to wait. If the auction is approaching, you can ask to extend or
postpone the auction which in most cases they will, if they know it is a legitimate
offer.

Next in the short sales process is the BPO. This stands for Brokers Price
Opinion. This is by far one of the most important steps in the whole process.
Basically a real estate agent will come out and give their opinion on what the house
is worth. The key to short sales is the BPO. You want to try everything you can to
influence the BPO to come in as low as you can. The lower the better. You can
influence the BPO by creating a list of (low) comps in the area, a list of repairs, and
showing up at the property to point out every little item that needs replaced. When
the BPO comes in low, the banks will usually accept your offer.

Copyright 2005, Foreclosures and Flippers Inc. - All Rights Reserved.

Jarad Severe is a leading authority and expert in Foreclosures. He is
President and CEO of Foreclosures and Flippers Inc. Jarad can be reached by email
at:

href=”mailto:info@foreclosuresandflippers.com”>info@foreclosuresandflippers.com
or you can visit his website at:
http://www.foreclosuresandflippers.com to receive more information on foreclosures,
short
sales and more.

To order your credit report there are three primary credit reporting agencies that you need to contact:

1. Equifax (800-685-1111)
2. Experian (888-397-3742)
3. Trans Union (800-888-4213)

Why should you contact all three credit reporting agencies? The main reason is that different creditors may choose to report to a single company, as opposed to all three credit reporting companies.

Once you have obtained your credit history, sit down with your real estate agent and make sure that all of the information within the credit report is accurate. Your agent should be able to guide you through the report and what it will mean to your home financing process.

As part of the home buying process, you and your real estate agent will want to make sure to evaluate your entire credit report for any discrepancies.

Credit reporting agencies are required to publish their requirements of the steps you will need to take in order to dispute any information contained in your credit report that is at issue. You need to follow these steps according to their guidelines in order to remove any discrepancies and get the information changed and updated as soon as possible.

As part of this process, you might also want to add what is called a �consumer statement� to your credit report as an explanation of any late or missed payments to your creditors.
In the world today our credit history is exposed to many liabilities. It is a good idea to check your credit report periodically for any discrepancies and to dispute any incorrect information.

If, like many Americans, you have fallen on hard times financially, but you still want to buy a home, there are some steps that can be taken to repairing your credit.

Depending on how damaged your credit score is, you might want to put your plans of buying a home on hold for another year. It�s not uncommon for modern home buyers to take a period of several years to repair their credit and prepare themselves for the responsibility of paying a mortgage. The following are some steps that you can take towards repairing your credit:

1. Make all of your current payments of bills on time.
2. Start to pay off your credit cards.
3. Establish at least one year of no late payments on any of your bills.
4. Develop good buying habits.
5. Make no unnecessary or frivolous purchases.

As you can see, past histories of poor credit or financial problems don�t have to stop you from experiencing the joys of owning a home. Although they can be a temporary road block, by working with a qualified real estate professional you can prevent your credit history from becoming an obstacle in the purchase of your new home.

Michael Williams is a licensed real estate agent serving the metro Phoenix, Arizona area. To find residential property listings in Phoenix, or to sell your Phoenix home, visit his real estate website at http://www.coolazproperties.com