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Working w/ Realtors


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The purpose of this presentation is to show, Realtors and Investors, why working with us on your short sale properties is extremely beneficial. We are a preferred investor with the majority of lenders and have direct contacts to expidite the process.

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Working w/ Realtors

  1. 1. Selling Real Estate Using “Short Sales” Morgan McDonald Jonas Elliott, Sr. David Ayala LMS of SWFL Loss Mitigation Services 1870 Clayton Ct. Estero, Fl 33907 O-(239)689-7672 F-239(689-7079)
  2. 2. Goals <ul><li>Educate you on how to capitalize in this down market & make additional commissions thru short sales. </li></ul><ul><li>Educate you on how to help homeowners who are desperately looking for help by understanding their options. </li></ul>
  3. 3. Important Information! <ul><li>What is LMS of SWFL, LLC: </li></ul><ul><li>A short sale OUTSOURSING, negotiation </li></ul><ul><ul><li>& consulting service </li></ul></ul><ul><li>Realtors, sellers and lenders </li></ul><ul><li>Here to assist realtors with short sales </li></ul><ul><li>Here to provide solutions </li></ul>
  4. 4. What is a Short Sale? <ul><li>Occurs when a lender agrees to except less money than what is currently owed on the property to allow transfer to a new buyer. </li></ul><ul><li>Not just for pre-foreclosures or loans in default. </li></ul><ul><li>Can be negotiated on all mortgages plus junior liens. </li></ul>
  5. 5. What if you could…….? <ul><li>Outsource all the short sale negotiations to an expert </li></ul><ul><li>Pay no fees (seller, buyer or agent) </li></ul><ul><li>Check “case” status online 24/7 </li></ul><ul><li>Title and escrow with a proven expert </li></ul><ul><li>EARN FULL COMMISSIONS when properties transfer </li></ul>
  6. 6. TOPICS <ul><li>Case Study </li></ul><ul><li>The Foreclosure Crisis </li></ul><ul><li>Market Size </li></ul><ul><li>Working the Foreclosure Market </li></ul><ul><li>Short Sales: What, When and Why </li></ul><ul><li>Steps in a Short Sale – Flow Charts </li></ul><ul><li>How Short Sales Can Benefit You </li></ul>
  7. 7. Case Study - typical deal <ul><li>Payoffs are at or more than the value- </li></ul><ul><li>Can’t currently sell home to cover what is owed </li></ul><ul><li>No equity in property when closing costs and commissions are factored in </li></ul><ul><li>Homeowner in foreclosure </li></ul><ul><li>Homeowner wants to get out of situation </li></ul><ul><li>Realtor wants to outsource extra work involved in short sale negotiations with lenders. </li></ul>
  8. 8. The Foreclosure Crisis <ul><li>Increase in the number of ARMs and rising interest rates: </li></ul><ul><ul><li>Nearly 25% of all mortgages – 10 million – carry adjustable interest rates. </li></ul></ul><ul><ul><li>Source: Mortgage Bankers Association </li></ul></ul><ul><ul><li>One in 8 households with ARMs that originated in 2004 and 2005 will default on those loans. </li></ul></ul><ul><ul><li>Source: Moody’s Economy. com </li></ul></ul>
  9. 9. The Foreclosure Crisis <ul><li>1/8 of all mortgages are considered </li></ul><ul><li>SUB PRIME </li></ul><ul><li>AND </li></ul><ul><li>60% of all new foreclosures are </li></ul><ul><li>SUB PRIME LOANS </li></ul><ul><ul><ul><li>Source: Center for Responsible Lending </li></ul></ul></ul>
  10. 10. The Foreclosure Crisis <ul><li>The crisis isn’t limited to conventional, sub-prime loans: </li></ul><ul><ul><li>12% of FHA loans are either in foreclosure or delinquent. </li></ul></ul><ul><ul><li> Source: Mortgage Banking Association </li></ul></ul><ul><li>As one advocate put it, “This is the worst time for foreclosures basically since the </li></ul><ul><li>Great Depression.&quot; </li></ul>
  11. 11. The Foreclosure Crisis <ul><li>Prime loans drop from 66% to 45% of the market from 2002-2006. </li></ul><ul><li>Sub-prime, Alt-A, piggybacks (80/20’s), ARM’s, interest only and other “exotic” mortgages take over the majority of market (51%) for 1 st time ever in 2006. </li></ul><ul><ul><ul><li>Credit Suisse Mortgage Report 2007 </li></ul></ul></ul>
  12. 12. The Foreclosure Crisis <ul><li>&quot;The biggest growth department in all of the mortgage-lending servicing departments over the last year has been the loss-mitigation department . That is the department dedicated to finding solutions to defaulted loans other than foreclosure” . </li></ul><ul><li>Source: Bruce Juenger, President of the Association of Real Estate Owned Managers in Los Angeles </li></ul>
  13. 13. Chicago Federal Reserve Study <ul><li>Lenders lost about $50k per foreclosure </li></ul><ul><li>Lenders re-coup an average of only 59% of the original loan amount per foreclosure </li></ul>
  14. 14. Market Size - Nationally <ul><li>Nationally 4.95% of all homes were delinquent – at least 30 days behind </li></ul><ul><li>Nationally 1.19% of all homes were in the foreclosure process in varying stages. </li></ul><ul><li>Sub-prime and FHA had highest % </li></ul>
  15. 15. Market Size - Florida <ul><li>One of the worst performing states is Florida, 14.84% of all loans are delinquent, as reported by the Mortgage Banking Association. </li></ul><ul><li>SWFL has routinely been in top 3 areas in ENTIRE COUNTRY for foreclosures. </li></ul><ul><li>Lenders own 8% of all homes in LEE COUNTY – bank owned </li></ul>
  16. 16. Working the Foreclosure Market <ul><li>Working with People in Foreclosure </li></ul><ul><ul><li>Homeowners rely on your knowledge and advice. You have an obligation to maintain the high standards of technical competence and integrity </li></ul></ul><ul><ul><li>Always place the best interests of the homeowner above all else, and disclose fully the facts representing the true costs, benefits and limitations of any recommendation. </li></ul></ul>
  17. 17. Working the Pre-foreclosure Market <ul><li>Stages of the Foreclosure Process </li></ul><ul><ul><li>Collections – 1 st 90 days delinquent </li></ul></ul><ul><ul><li>Pre-foreclosure – 90 days - 12 months </li></ul></ul><ul><ul><ul><ul><li>Short Sale Potential in this stage!!!! </li></ul></ul></ul></ul><ul><ul><li>Foreclosure Sale – Sheriff’s auction </li></ul></ul><ul><ul><li>Redemption Period – 30 days or less </li></ul></ul><ul><ul><li>REO Department – until liquidated </li></ul></ul>
  18. 18. Working the Pre-foreclosure Market <ul><li>Options for Homeowners in Foreclosure – </li></ul><ul><ul><li>Refinance </li></ul></ul><ul><ul><li>Loan Modification </li></ul></ul><ul><ul><li>Forbearance / Repayment Plan </li></ul></ul><ul><ul><li>Partial Claim </li></ul></ul><ul><ul><li>Bankruptcy </li></ul></ul><ul><ul><li>Deed in Lieu (voluntary foreclosure) </li></ul></ul><ul><ul><li>Sell </li></ul></ul>
  19. 19. Working the Pre-foreclosure Market <ul><li>Options for Lenders with loans in Foreclosure </li></ul><ul><ul><li>Workout Plan / Repayment plan </li></ul></ul><ul><ul><li>Deed In Lieu (voluntary foreclosure) </li></ul></ul><ul><ul><li>Short Sale </li></ul></ul><ul><ul><li>Sheriff’s Sale </li></ul></ul><ul><ul><li>REO </li></ul></ul>
  20. 20. When Will a Lender Consider a Short Sale? <ul><li>On loans in default, or where default is perceived or inevitable. </li></ul><ul><li>When a lender receives an offer that is higher than what it expects to net by foreclosing. </li></ul>
  21. 21. Why Would a Lender Consider a Short Sale? <ul><li>Lenders are in the business of loaning money, not managing and selling real estate. </li></ul><ul><li>Non-performing loans reduce what can be loaned by 2-8X the amount of bad debt. </li></ul><ul><li>Lenders have Loss Mitigation Departments responsible for mitigating , or minimizing , losses from defaulted mortgage loans. </li></ul>
  22. 22. Steps In a Short Sale <ul><li>Refer an owner in foreclosure, or expects to be, who is both interested in selling and participating. </li></ul><ul><li>We determine the likelihood of success based on the ability to negotiate a discount and the ability to resell the property. </li></ul><ul><li>We confer with the sellers and listing agent to explain the process and coordinate required documents </li></ul>
  23. 23. Steps In a Short Sale <ul><li>We prepare, submit and negotiate the short sale package, driving the entire process for all lien holders. </li></ul><ul><li>We prepare a repair estimate. </li></ul><ul><li>We make an investor offer to start the process. </li></ul><ul><li>LMS requests the lender to postpone auction (if needed). </li></ul><ul><li>LMS follows up on offer & triggers a BPO (Broker Price Opinion). </li></ul>
  24. 24. Steps In a Short Sale <ul><li>A BPO is ordered by the lender to obtain the “as is” value, which is used to determine if the loan can be discounted and by how much. </li></ul><ul><li>Once our offer is accepted by the lender we will supply you with the value for you to list and market this property </li></ul>
  25. 25. Steps In a Short Sale <ul><li>The negotiated settlement will stipulate the lender is to pay all seller closing costs, including real estate commissions. </li></ul><ul><li>We will handle title and escrow to transfer property to end buyer. </li></ul>
  26. 26. The Interior BPO <ul><li>The most critical point of the entire short sale process. </li></ul><ul><li>Opportunity to validate the offer. </li></ul><ul><li>Whatever the BPO comes in at, the lender views that # as the FMV. </li></ul><ul><li>Lenders want approximately 85-100% of new BPO. </li></ul>
  27. 27. Risks for Agents <ul><li>Waste time and energy on listings when an acceptable discount could not be negotiated. </li></ul><ul><li>Upset agents and brokers when they lose a buyer because the process took too long or the commission was reduced by the lender. </li></ul><ul><li>Unable to find a buyer in time. </li></ul><ul><li>Negotiate a discount and have the buyer not close. </li></ul>
  28. 28. Risks for Sellers <ul><li>The lender may choose to either: </li></ul><ul><ul><li>Seek a deficiency judgment against the seller for the shortfall (HSBC) </li></ul></ul><ul><ul><li>Send a 1099C for the shortfall, creating a tax liability for the seller. </li></ul></ul><ul><ul><li>IRS Pub 523 </li></ul></ul><ul><ul><li>Internal Revenue Code Form 982 Sec 121 </li></ul></ul>
  29. 29. Rewards to Agents <ul><li>Allows properties with no equity to be sold at attractive prices in a short time . </li></ul><ul><li>There is less competition among agents for properties that have little or no equity. </li></ul><ul><li>Allows you to earn full commissions on sales that would have been lost without a short sale. </li></ul><ul><li>Provides a way to help people in financial difficulty who couldn’t otherwise be helped. </li></ul>
  30. 30. Rewards to Agents <ul><li>Easy to demonstrate benefits to sellers in need. </li></ul><ul><li>Creates new opportunity in a growing market with little competition. </li></ul><ul><li>You set the price where it will sell quickly , since it is a forced sale, earning commissions on sales you would not otherwise make. </li></ul><ul><li>Receive strong testimonials and referrals from people who couldn’t be helped by anyone else. </li></ul>
  31. 31. How Short Sales Benefit Homeowners <ul><li>Homeowners don’t pay for anything . </li></ul><ul><li>Sellers avoid a foreclosure on their credit report . </li></ul><ul><li>Most lenders will waive their right to a deficiency judgment as part of settlement. </li></ul><ul><li>Short sales minimize the loss , and therefore any shortfall reflected on a 1099C. </li></ul><ul><li>Homeowners can often avoid paying income tax on the shortfall when professionally advised. </li></ul><ul><li>Allows sellers to get on with their lives ! </li></ul>
  32. 32. Important Information! <ul><li>Online Case Submission & Management </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Realeflow is the world's Most Powerful Real Estate Business Management System. It will allow you to gain access to your clients file 24/7. You can see updates and be kept up to speed through-out the entire process. </li></ul></ul>
  33. 33. Free Short Sale E-book <ul><li>“ Short Sale Manifesto” </li></ul><ul><li> </li></ul><ul><li>FREE 50 page e-book on pre-foreclosures & short sales </li></ul>
  34. 34. Key Points Covered <ul><li>The Foreclosure Crisis </li></ul><ul><li>Market Size </li></ul><ul><li>Working the Foreclosure Market </li></ul><ul><li>Short Sales: What, When and Why </li></ul><ul><li>Steps in a Short Sale </li></ul><ul><li>How Short Sales Benefit You </li></ul>
  35. 35. Questions? <ul><li>To refer short sale business, please contact: </li></ul><ul><li>Morgan McDonald </li></ul><ul><li>Loss Mitigation Services of SWFL. </li></ul><ul><li>[email_address] </li></ul><ul><li>Office: 239-689-7672 </li></ul><ul><li>Fax: 239-689-7679 </li></ul>