Real estate success stories from the weekend

Many of my agents and clients are reporting great activity with both buyers and sellers.  Hearing about the success of others is always inspiring to me, so I thought a few pieces of good information would brighten the day for someone else.

Success story #1: An agent recently joined our office.  He was brand-new to real estate and started making phone calls, because that’s what we told him to do if he wanted to generate business (crazy idea…I know).  On his first night as a real estate agent, he found two buyers.  One of those buyers is an investor and is buying multiple properties for cash this year, in addition to using the new agent for a $2MM+ purchase of his personal residence (the personal residence purchase is the weekend success part).

Lesson: Make more phone calls.

Success story #2: An agent hosted an open house on Sunday and found five live buyers and one potential listing.  Because of the affordability level right now and the good press surrounding the new tax credit, buyers are out in full-force.

Lesson: The fundamentals in real estate don’t change when the market changes.

Success story #3: A seller who had been trying to get a short sale approved since last October finally got the lender’s approval.  Lenders are finally coming to terms with their situations and making better decisions than we have seen for the past 12 months.

Lesson: Persistence matters in this market.


I’m hearing positive stories every day, regardless of the market conditions.  We’re experiencing a “perfect storm” for buyers right now.  You never know when the bottom of the market is really the bottom until it’s gone.

www.mangledmortgage.com

Make the deal yourself!

There are two types of properties my investors are considering right now.

1.  The properties that are “deals” as they are advertised.

2.  The properties that become deals after negotiating.

Can you guess which category holds the most deals?

Too often, I encounter pretend investors who tell me to call them when I find a screaming deal.  My response is always, “I’d be happy to.  Can you tell me exactly what a ‘screaming deal’ looks like to you?”  I don’t want to assume anything.

I know they’re pretend investors when they can’t answer my question clearly and concisely.  The person who says something about, “a little old lady that’s going into a retirement home and wants to give away the equity in her property” is not the investor for me.  That person clearly watches too much late-night television.

The person who tells me, “3 bedroom, 2 bathroom, brick house, in X school district that can be purchased for 80% of market value or less” is the investor for me.

Do you see the difference?

Occasionally, I do find properties that are great deals just as they are.  These properties go fast because the rest of the world can also see them.  The gold is in the properties where you have to negotiate a little bit.  My favorites right now are short sales because they’re a total hassle most of the time.  Most agents don’t like them, don’t understand them, and won’t be able to get them closed.  Buyers are told by their uneducated agents that short sales are too much work, so they shouldn’t bother.  I love them for those reasons.

Anywhere you find HARD WORK in the real estate sales business, there is usually a great opportunity.  Most agents in my life are not interested in hard work, so I don’t have much competition.

Foreclosures, on the other hand, are not the types of deals that excite me right now.  Most of them are in poor condition and will take too much time and capital to return to market value.

If I can get a better discount on a short sale, and the short sale doesn’t need any work done to it, why would I bother with a nasty bank-owned property that has no appliances and trash everywhere?

My investors have all asked the same question and are now on the short sale bus with me.

Where can I buy a copy of Mangled Mortgage?

Right now, the only place to buy it is right here. Email info@mangledmortgage.com and you’ll get a reply with easy payment options.  Books start shipping the week of March 9th.

Someday, you may be able to find it on the big online shops.  Until then, this is the Mangled Mortgage shop.

Mangled Mortgage is a book about foreclosures, short sales, and loan modifications written by someone who lives and breathes mortgage challenges every day.  Jon Sterling works in real estate sales Southern California, where he moved specifically because of the housing crisis.  Working in some of the most challenging markets in the United States, Jon’s team provides a wealth of experience and perspective for today’s real estate market.

Foreclosure myths

There are many common myths about foreclosures.  Some of them come from late-night infomercials and some of them come from people who are interested in selling advertising space instead of providing facts.  The myths are outlined in my book, and here are some of the common myths:

Myth:

All foreclosures are a steal.

Truth:

Lenders and their investors have a good idea of what a property is worth.  Granted, some of them are interested in selling property at a steep discount so they can meet their liquidity needs, but the discount is often built into the list price you see by the time it hits the market.  You will often find better deals by looking in an area with lots of foreclosures, but not necessarily with a bank-owned property.

Myth:

All foreclosures are damaged and need work.

Truth:

Not all foreclosures are damaged.  Many former owners cooperate with the lender when they realize they cannot keep their home and leave the place in good condition.  Lenders will usually try to negotiate “cash for keys” if the owner will leave the property in good condition.

Myth:

Making money investing in foreclosures is easy.

Truth:

It’s not as easy as it says on the TV commercial.  Yes, there are many people who have successfully made big money investing in foreclosures.  The question I always ask is, “If this person made so much money investing in foreclosures, why are they putting so much effort into selling an information product for three easy payments of $29.95?”

The best investors I know are spending their money on pre-foreclosures and short sales right now.  Check back periodically for updates on those investment strategies.   You can direct specific questions to info@mangledmortgage.com for a quick response.

Order a copy of Mangled Mortgage today!

For a copy of Mangled Mortgage:  Everything you need to know about foreclosures, short sales, and loan modifications, the only place to buy it is right here.

Send a message to info@mangledmortgage.com with BOOK in the subject line and I’ll send you a choice of payment options.

This site is designed as an informational place and those order forms are so cheesy looking.  Don’t get me wrong…I still want you to buy the book.  I just want to flirt with you before we get married, so to speak.

-Jon

First-Time Home Buyer Tax Credit

The first-time home buyer tax credit will help us burn through some of the short sale and foreclosure inventory on the market.  The tax credit has been through several iterations.  Here are the broad strokes:

-The tax credit does not have to be repaid.

-The tax credit is only for first-time buyers.

-The tax credit is 10% of the purchase price, with a maximum of $8,000.

-So far, this only applies to property purchased in 2009.

-To qualify, single people can’t make more than $75,000 and couples can’t make more than $150,000.

For a list of frequently asked questions on the tax credit details, visit the tax credit FAQ page.

Tips for the hardship letter

The hardship letter needs to have a few basic elements.   The obvious ones are the loan number, names of the borrowers, and a description of the hardship.  You don’t have to be a literary genius to create your own hardship letter, but there are ways to improve the effectiveness of the letter.

Tip #1

Instead of simply stating the facts of the financial hardship situation, you want to evoke emotion in the reader.  Remember, the reader is the loss mitigator and that person’s job is to make sure the lenders and the investors backing the lenders limit their losses.  If they can feel some sympathy for your situation, you have a much better chance of getting the short sale or loan modification approved.

Tip #2

If the financial situation of the borrower is looking grim and they might be headed toward bankruptcy, mention that.  Any mention of the word “bankruptcy” will create a sense of urgency with the loss mitigator.  If bankruptcy is not a possibility, don’t waste your time trying to bluff.  It isn’t honest and you get into a gray area that includes a crime called  fraud.

Tip #3

Give specific examples of things that have been done to help remedy the hardship situation.  The lender needs to understand that you are experiencing a real hardship, and not just trying to game the system.  The short sale and loan modification processes are complex and thorough to be sure each situation is legitimate.

For more tips and information on the housing mess, check out my book Mangled Mortgage. Email info@mangledmortgage.com.

Short Sales

I recently saw a short sale listing being advertised and there was an exterior photo of the house.  Parked in the driveway was a BIG speedboat.  The seller had refinanced the mortgage several times, had no equity (spent on a boat, perhaps?), and needed to sell.

Many people are not even being subtle about abandoning their obligations these days because it is commonplace to do so.  As long as borrowers are allowed to shrug and walk away, there will continue to be major challenges in the housing industry.

There are also people with legitimate hardships.  Those people did not necessarily do anything wrong; they are victims of the situation.  Because of the irresponsible actions of others, these borrowers are feeling the financial pain.  It is a basic economic law:  As supply increases, demand decreases.

As the number of homes on the market increases, the demand for all the homes on the market decreases.  As the demand decreases, prices adjust downward.  With the glut of foreclosures on the market from the over-leveraged homeowners and the “shrug and walk away” people, those who made responsible financing decisions are at risk of suffering the consequences of too much inventory and decreasing home values.

For more information on foreclosures, short sales, and loan modifications, or to order a copy of Mangled Mortgage, send a message to info@mangledmortgage.com.