Wells Fargo, Freddie Mac & FHA Have All Changed Their Business Models In The Past 6 Months To Allow For Short Sale Flips. Have You Done The Same With Your Business?
Dear Real Estate Agent,
In our ever changing real estate landscape, short sales are becoming a more common method of liquidating properties.
But we all know the inherent problems with short sale listings:
- More work for you, the listing agent, than a "traditional" sale
- Less commission for you, the listing agent, than a "traditional sale" (and you're actually doing more work on these short sale files!)
- Buyers who get frustrated after multiple months of "waiting for an answer" from the lender (and can you blame them with some of these wait times?)
- Insane BPO values that can kill your deal and leave you scratching your head wondering "how the heck did they come up with that inflated value?"
So What Do You Do? What Are You Options?
- Ignore short sales and fight with more agents over "traditional" listings
- Refer your short sale deals to the "short sale expert" in your office, or another office, and be forced to pay them a referral commission
- Work the short sale deals yourself, and make less in commissions for doing more work, while watching buyers fall by the wayside on every deal?
There has to be a better way...
Recently, Freddie Mac, FHA and Wells Fargo have all made major changes to their business models to allow for short sale properties to be flipped, legally and ethically. In fact, that's what me and my company, Foreclosure Resources do.
We Flip Short Sales
Now before you get worried about thinking that we're doing something "illegal," I want to point you to 3 specific bulletins from these three major financial institutions that have been issued in the last 6 months:
First, in October of 2009, Freddie Mac released a bulletin that you can download here: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0924.pdf. On the first page of this bulletin is a link to Freddie Mac's Best Practices for Loans Involving Possible Property Flips, which can be found here: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0924xA.pdf. Most interesting to note is that Freddie Mac says that
| "A property involved in a flip may be resold on the same day or within days, weeks, or months of the purchase. In some cases, the seller of a property flip never holds title to the property, but instead sells or assigns their interest in a contract to purchase the property to a third party." | |||
Freddie Mac Then Goes On To Say That... | "Property flips are not inherently illegal and not all transactions involving a rapid purchase and resale are improper. Legitimate property flips are acceptable transactions in connection with loans purchased by Freddie Mac." |
Then on January 15th 2010 FHA issued a waiver of its "90 Day Seasoning Rule" for 1 year. This now means that FHA will lend on properties no matter how long the seller has been on title, instead of their standard 90 days. You can see this on HUD's website by visiting this link: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf Finally, Wells Fargo, who issued more mortgage loans that any other company in 2009, has now allowed their borrowers to buy properties that are being flipped by others. You can see this internal document that Wells Fargo mortgage lending released at the beginning of 2010 here. So why is this significant? Three MAJOR players in the United States housing industry are changing their policies and business practices to allow for short sale flips and for homeowners to get mortgages where the seller is "flipping" the property to the buyer. I'm sure you'll agree with me that if 3 big time banking giants like HUD, Freddie Mac and Wells Fargo are making these changes, they're accepting the legitimacy of short sale flips and see them as a viable way to help eliminate foreclosures and help rebuild and stabilize the housing market. In fact, last fall, before 2 of the 3 major announcements were even released, Mr. Lem Marshall, Special Counsel to the VAR (the Virginia Association of Realtors) posted an article in their Commonwealth Magazine, a publication that is "A journal for real estate professionals published by the Virginia Association of REALTORS®" You can read the entire article here. (The main article is on page 12 of the publication, which is page 14 of the PDF), or, if you prefer a quick 2 page PDF document extracted from the magazine covering this very specific topic, then you can download it here. What's important to note, however, is how Lem ends the article, and his analysis of short sale flips, with the following paragraph:
"So who loses? Nobody. Even the tax collectors and insurance folks come out ahead, as they get payments from owners making productive use of the asset. We all gain when inefficiency, uncertainty, and waste are squeezed out of the system. And we help hasten the return of reasonable market valuations, something of great benefit to our communities at large."
So What Does This Mean For You And Your Business?
Are you still doing short sales "the old way?" You know, doing more work than ever before, spending the majority of your day on hold with lenders, re-faxing the same set of documents for the 17th time, earning a smaller commission, and watching buyers walk on your deals because "...they're taking too long to close..."
What about if we told you that when you work with our company, Foreclosure Resources we'll actually buy your short sale listing TOMORROW. Not only that, but we'll also:
- Guarantee you a FOUR (4%) percent commission on your listing (no matter how much the lender approves on the HUD1)
- Take over 100% of the short sale negotiations (so you can spend your time talking to more buyers, and more sellers, and no more lenders!)
- Be a committed buyer, and not "flake out" and withdraw our offer (no matter how long it takes to get approved)
- Disclose absolutely everything to you, your seller, the lender and the buyer (using our compliant addendums and documents)
- Put an offer in writing for your listing tomorrow (so you can move on to the next deal and spend your time on more fun and profitable activities)
- Guarantee that it doesn't cost you OR your client a single penny
So How Does This Work?
It's very simple. The next time you get a short sale listing, (or if you have any short sale listings right now that don't have any offers) call us! We'll check some quick numbers, and if your deal qualifies, we'll write up an offer on the property within 24 hours. We'll then take over negotiations of the file, including handling and meeting with the BPO agent. In the meantime, we ask that you continue to market the property and help us find an "end buyer" for this property. Once we have an approval, and we have found the end buyer, we'll set up a "double" or "back-to-back" closing for the same day. We buy the property from the seller in distress, and close on it. We then turn around and sell the property to the "end buyer" on the very same day. Our profit comes from the difference in price that we buy the property, and for how much we sell it for. Everything is disclosed to you, the seller, and the lender, so everyone knows exactly what everyone's intentions are. We have found this to be the most efficient way to liquidate short sales on the market, and we want you to work with us on your next deal!