How to win in multiple contract situations...short sales & reo's

Art Grace’s ways to win multiple contracts:

Write a perfect contract – it reflects your professionalism. Put in all details for listing agent on page 10 of contract, dot the i’s and cross the T’s.

Be aware of appraisal train wreck ahead

Don’t write in “As-is” contract – home inspection for informational purposes only.

Read the bank addendum and see if the addendum says you have the right to inspect, or does it allow you to have a home inspection opportunity?

Reasonable price is paramount to the bank – don’t make ridiculously high offers – especially with FHA loans or a price you know won’t appraise

Submit comparables that will help your offer and appraisal through when you come in high

Ask for a repair credit and any balance will be returned to the seller prior to closing – not all banks will approve

Fannie Mae will not allow any repairs prior to closing and you cannot obtainFHA financing unless it’s a 203K loan program

Have a licensed contractor or home inspector preview property prior to submitting offer – relieves obligation of home inspection contingency
Human element of buyers does not impact the sale as much as it does with arms length transactions

Don’t make multiple contacts to listing agent – don’t be threatening or confrontational or overbearing. Listing agent doesn’t hound their asset manager so don’t hassle them.

Email is typically the best way to communicate with listing agents

Scratch through paragraph 13 on contract removing the right to change financing.

Highest and best is still critical – Competence of agent, title, mortgage company in addition to big deposit, quick closing, waving inspections, etc.

Write on bank addendums or refer to your client’s addendum on their addendum unless it’s Fannie Mae – they don’t allow you to alter their addendum

Watch out for anti-flipping rules in Freddie/Fannie addendum

Short sales

Problem #1 – there are too many processes – virtually a process for every agent

Ask the listing agent how they are going to handle the process

Don’t avoid them – they are everywhere and you can make a lot of money doing them

Write into the contract that the seller will only ratify and send one offer to the bank for approval

Get written evidence of rejection if seller is truly denied

It is not possible for the seller to provide a release of recordable lien in recordable from at the time of settlement-lender always has 90 days – not a “real” clause so strike the sentence in the addendum

Seller Side:

Get seller in touch with attorney to discuss short sale versus foreclosure and ramifications of bankruptcy

Avoid tax consequences by utilizing tax relief act that is in effect until 2012 if it is your principal residence – insolvency exemption as well to relieve tax obligation due to debt relief. Always have seller consult with tax advisor and attorney first – insolvency exemption can allow investors to sell under a short sale situation

Most success in short sales comes when sellers deals with lender directly – agents second – short sale negotiator 3rd (fees can be too high)

All in all, maintain your professionalism and communication with all parties involved in order to ensure a fair shot for your clients.