Buyers will work you over if you’re not careful. Buyers will kill your deal if you’re not careful. Buyers will frustrate you to quitting if you’re not careful. Buyers will cost you a LOT of money if you’re not careful! Here’s how you avoid being worked over, getting your deal killed, getting frustrated, and most importantly, here’s how you get maximum profit from buyers! Make your contracts solid. Have the right contingency clauses in your contracts. Here’s my favorite (AND AN ABSOLUTLY CRITICAL CONTINGENCY CLAUSE!!!). “This contract is contingent on a short sale price acceptable to seller.” This clause will get you out of the deal if the bank decides to foreclose, or if the bank gets you an approval letter at a price higher than you expected. Without this clause, you will be required (legally) to bring money to the table if, for example, you’re approval letter is for a price of $189,000 and you’re end buyer is paying $179,000. You MUST use that clause or something similar with your end buyer. Let me say that again, because it is SO CRITICAL!!! YOU MUST USE THAT CLAUSE OR SOMETHING SIMILAR TO PROTECT YOURSELF!!! Other clauses you can include would be, “subject to passing clear title,” “subject to using sellers closing attorney and title company.” Something else to put into the contract would be “property sold as is-where is.” This will prevent the buyer from “nickel and diming” you on the way to the closing table. The contract is key, and it must be tight in order to save you from pain on the way to the closing table.

One more note about buyers. Do not tell them too much about what’s happening. They will get suspicious, scared, or think they can take you for a ride. Here’s why. In today’s real estate environment, people think they can buy real estate and get a steal on it. Well, here’s the deal. You’re the real estate investor spending time and money learning how to short sale the properties and get them at steep discounts. They buyer is not entitled to that discount. The buyer needs to purchase the property at whatever the market is selling properties for. The difference between that number and what you’re able to negotiate with the bank is your paycheck, not the buyers. If the buyer finds out that the property is a pre foreclosure and short sale, they will want a piece of the pie. They will want a part of that discount. Again, they are not entitled to it, you are. So don’t advertise it. Realize that you should absolutely have it in the contract “subject to short sale approval acceptable to seller,” but that’s it. If you advertise the property as “PRE FORECLOSURE SHORT SALE MUST SELL NOW BRING ALL OFFERS!!!!” You will attract a different kind of buyer than if you advertise the property like every other property out there. Ok, so how do you get yours to stand out? It depends. What is attractive about the property? Maybe you need to drop the price a little under market value. Now it’s a good deal, just not a smashing deal. The Real Estate Agent on your team is the person that can help you with this piece. Remember, all markets are different. What I’m going in Raleigh, North Carolina may not work for someone in Chicago. Test your market and see what works.  

I hope this helps!

Marty Schulting

During the short sale process, timing of prepping the property for sale is very important.  Let’s assume in this example that the BPO was conducted three days ago, and you’re confident that there’s not going to be another BPO required. If you don’t have a buyer in place already, this is when you’re really going to need to bust it out and market this property for sale. The way that you prep each property is dependent upon the property itself and the market.  For instance, if this property is an absolute piece of junk and you know that somebody’s going to get in there and completely rehab it, then you know that you’re not going to add carpet and paint yourself.  This is pretty obvious.  What you do need to do is make sure that the investor that comes in there to look at the property can have a clear view of what needs to be done, and they don’t need to look over a bunch of clutter and garbage to see their potential rehab.  Now I’m not saying to go in there and clean this place up and make it pretty, but I am suggesting that you make it presentable for that investor to come in and look at.

If you’re going to try and retail this property, then you’re going to want to make it nice, while spending the least amount of money possible. Depending on the market prices in your area I would put a cap on the amount that you’re going to spend to make properties sellable.  For instance, in my area houses range from $250000-$500000 for a standard deal, and we put the cap on cleanups to $1000. We’ll do the best that we can without spending over $1000 to prep this property for sale to a retail buyer. If houses in your market go from $75-$100000 you might consider not spending more than $500 on a property in order to get it ready for sale to a retail buyer.

Things that you need to make sure happen when prepping up for sale to retail buyer: make sure the any garbage or debris is removed from the property and the premises. Make sure that the carpets are clean, the walls windows appliances and all cabinetry is wiped down and free of dirt or dust. Make sure the outside has curb appeal – lawn mowed, bark in the beds, nice flowers, what would you think if you drove up?

These are all simple things that can make the difference between your house simply sitting for sale, or somebody offering to purchase it very quickly, which in turn means the difference between you getting a check or not.

Sincerely,

David Corbaley