Thanks to a media blitz and a variety of new regulations, many real estate investors actually believe that it is no longer an option for them to “flip” (or flop, as some investors refer to it) short sale properties. And it is true that in many cases if you opt to resell a short sale property immediately, you may be subject to more intense scrutiny than if you subject yourself to a self-imposed seasoning period that, to some lenders and government officials, indicates that you are not getting ready to make “too much money” on that short sale deal that you poured so much blood, sweat and tears into.

However, there are some markets in which flopping – even with the increased attention and transparency requirements – makes all sorts of sense. Buyers are lining up to buy short sale properties, and they are simply unable to conduct the negotiations on their own or navigate the still-complicated short sale system. Markets like this are ideal for short sale investors who want to move their properties quickly, and the volume of buyers – often international – who are interested in getting US properties at a serious discount is staggering.

One such market is Miami, Florida, where studies show myriad nationalities of buyers are snapping up luxury condos and homes not just for vacation, but as investments. While those in the States may be worrying that property ownership no longer has the long-term investment power that it once did, people overseas are jumping at the chance to own land in this country – and taking advantage of the relatively weak dollar to buy in volume.

If you are looking for this type of buyer, then you need to focus on “multicultural” markets. That is one reason that Miami appears to be so popular. Venezuelans, Israelis and many other nationalities feel comfortable in the rich, multi-faceted environment, and most agree that this area of the country, which was hit early and first when the housing market tanked, will also be a bellwether – much like areas of California – when the recovery begins.

Of course, you need to be very careful when you flip short sale properties. Work closely with an attorney to make sure that you are obeying every single letter of the law when you do your deals. It can make things tedious, but you will be able to enjoy cashing your checks quickly and with peace of mind!

P.S. If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here:
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According to a report recently released by CoreLogic, lenders will take $310 million in unnecessary losses by the end of 2010 due to short sale fraud. Additionally, the report states that 1 in every 53 short sale transactions is fraudulent. This is disturbing in itself, but the way that the analytic firm came up with these numbers is even more disturbing. As a short sale investor, you need to know what lenders and analysts are viewing – and promoting – as red flags for fraud so that you can adjust your behavior and the structure of your deals accordingly.

1. Fast turnaround
Even though seasoning requirements in many areas have been lifted, lenders still see a fast flip as a sign that you mislead them about the value of a property. As a result, you must be very careful that your profit margins fall within an acceptable range – generally less than 20% better than what you gave the lender for the property – if you want to avoid sending up a red flag.

2. Vast profits
There is, unfortunately, no real way around this. If you make a big profit on the sale, then there is a chance that the lender will cry “foul.” Consider trying to extend the time between the original short sale and the second sale, if possible, if you have an aggressive lender, and work with your attorney to protect yourself if you plan on making big money with your short sale.

3. Realtor involvement
Many lenders are blaming real estate agents along with investors for their losses. They believe that real estate agents are trying to get “double duty” out of properties by assisting with a short sale and then a flip. Make sure that your real estate agent, if you are working with one, has met all transparency requirements on a property so that the lender cannot argue that all offers were not presented.

This may make short sales sound like a perilous transaction for investors, but in reality more than 98% are still going off smoothly for everyone involved. In order to avoid being part of that target 2%, however, you must scrutinize your actions to be sure that you are not throwing up red flags to lenders that you do not mean to.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here:
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As a short sale investor, you may find that there are times when you find a good short sale deal with the help of a real estate agent. Many times, the agent in question will bill him or herself as a “short sale specialist,” which may be a title that helps attract listings and implies a familiarity with the short sale process. As short sales take over more and more of the market, increasing numbers of agents are labeling themselves in this way. But does this actually mean anything, and is the title worth the commission that the individual in question is going to charge someone – probably you?

In some cases, working with an agent who specializes in short sales can really smooth the way through a transaction. If the agent has connections with the lender who has the lien on the property or has already done a great deal of the legwork necessary to set up the property for a short sale, then their commission may be a small price to pay for the time, effort and money you will save getting the deal under way. In cases where the agent actually has standing relationships with lenders or has already set up the property to be short-sale ready, it will likely be worth it to work with them.

However, other “specialists” may have far more limited use. Some agents simply add this descriptor to their list of titles to indicate that they will work with short sales or know the basics about what one is. In this type of scenario, they may be little help and you may end up spending a lot of time explaining what you are doing or trying to work around them rather than being able to utilize them as part of your team. If the real estate agent in question cannot contribute to the process in a positive manner, then their specialization will probably not be something that makes them an attractive temporary member of your deal-making team.

Of course, if you find the property with the help of an agent who is a short sale specialist, then regardless of whether or not that billing is accurate, you will likely have to work with them. However, if you have a choice in the matter, look for agents who have the relationships and experience to actually back up their claims before you sign them on.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here:
http://www.freeshortsalecourse.com/

As a short sale investor, you probably know that finding buyers is as delicate a process in a lot of cases as finding sellers. Particularly in this market, while lots of people think that they want to purchase a home via short sale, they think this largely because of a media-created perception of what the transaction is, not what the process actually entails. As a result, many short sale buyers can be just as difficult as short sale sellers to work with.

One way to get around this problem when you are looking for short sale buyers is to be very clear up front with what type of short sale buyers you are looking for. This may be partially impacted by what type of short sale properties you deal with. For example, if you frequently end up with short sales on VA loans thanks to your particular client base, then you might want to target investors since these loans usually do not require a seasoning period of any kind and can be flipped immediately, should you choose to do so. On the other hand, if you work mainly with sellers who have loans with lenders who have requirements like a seasoning period, a guarantee that you will not net more than 20% profit on the transaction or whose regulations make it necessary for you to invest in properties that require some serious rehab (all viable ways that short sale investors are making the current short sale market work for them), then you may want to look for buyers whose needs more closely match your own.

Additionally, you might want to consider courting international buyers, should your market prove attractive to this segment of the buying population. For example, in many luxury markets international buyers are snapping up deals and paying all cash for them because their currency is currently strong against the dollar and the U.S. housing market is still considered a pretty solid investment – particularly at today’s rock bottom prices. Furthermore, international buyers will not be impacted by the expiration of the tax credit or any rumors of further federal assistance forthcoming or not, since they will not qualify for it anyway.

Short sale investing is still going strong, and in some areas of the country, a quarter or more of all home sales are short sales. With this kind of volume and potential, you cannot afford to be left behind. Starting now, identify the target profiles of both your buyers and your sellers, then get those short sales moving.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here:
http://www.freeshortsalecourse.com/

Every short sale investor has a specialty – that particular type of deal that they do better than any other. In many cases, the success of a deal can hinge on how familiar you are with the type of negotiations that go along with it. If you are just getting started in the short sale business, you may want to focus on a type of property or transaction that is easy to find right now, in today’s market, in order to maximize your ability to find and do deals.

One way to maximize your opportunities is to familiarize yourself with the HAFA process. HAFA stands for Home Affordable Foreclosure Alternatives, and it is the federal program that the government has designed to help homeowners who cannot keep their homes avoid foreclosures. This program is mandatory in many cases – particularly if a home is owner-occupied – so being familiar with the process, which is still relatively new, can give you a huge advantage in the short sale process.

HAFA homes frequently come with a long list of requirements that may discourage other short sale negotiators. For example, before homeowners can qualify for HAFA, they have to attempt to qualify for HAMP (Home Affordable Modification Program), a federal program designed to modify mortgage terms to help homeowners remain in homes. Even if a homeowner just wants out of a home, if they want out through HAFA – and the incentives that come with this program – they have to try HAMP. Your ability to navigate the HAMP process can make you a more attractive candidate to ultimately perform their short sale.

Of course, you may want to steer clear of the complications of federal programs all together. In that case, you will want to look for homes and homeowners who simply cannot qualify for participation in HAMP and HAFA, since people who do qualify are often required to go through the entire process whether they want to or not. You might want to specialize in vacation homes, second homes, rental properties or other types of properties that can and are distressed in this economy, but are not owner-occupied.

No matter what area of specialty you choose, creating a short sale niche for yourself can be a great way to get moving in this business faster. Also remember that there are many short sale investors out there who are looking for their own specialty deals, so if you encounter a deal that does not work for you, you may still be able to monetize that lead if you know someone who is looking for that type of deal or property.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here:
http://www.freeshortsalecourse.com/

Recently, Bank of America sent out nearly 100,000 solicitations to distressed homeowners offering them a chance at a deed-in-lieu transaction. “Deed-in-lieu” refers to giving the deed to your home to a lender in order to circumvent the foreclosure process. You get to walk away from your home, and the lender declares the debt resolved because you returned the home, your collateral. Many lenders have announced that they will offer a variety of incentives for this type of transaction because it saves them a great deal of time and money in processing costs even though they may take a hit when they try to resell the home in today’s market.

Some short sale investors are viewing this new trend with concern, particularly since some lenders have stated that they find deed-in-lieu transactions preferable to short sale transactions since they take so much less time. Additionally, homeowners who are going to lose their homes anyway may find this to be a more acceptable alternative since it is being portrayed as a route to 100% resolving the debt rather than worrying about being followed up with later for the remainder just when you have gotten back on your feet.

As a short sale investor, you should not be too worried about this, however. For starters, there are many, many, many homes that will still go through the short sale process, and not all circumstances are going to warrant or qualify for a deed-in-lieu transaction. Additionally, you can point out to homeowners who may be backing out of a short sale that unless the wording in their deed-in-lieu agreement specifies that the debt is considered entirely resolved by the return of the property, this may not be the case. Furthermore, while both deed-in-lieu and a short sale do go on your credit history and negatively impact your credit score, a deed-in-lieu remains on your history for a full 7 years, and you may have to request that it be removed. According to new legislation, short sales may be removed as soon as 3 years in some cases.

Certainly, some homeowners may opt for a deed-in-lieu transaction instead of a short sale transaction with you. However, the current deed-in-lieu “push” could actually be a positive, since it may put a dent in homes that lenders were unwilling to short sell anyway. Simply be prepared to answer questions about this type of transaction, then continue doing your short sales and helping people in trouble resolve their personal housing crises.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here:
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· 5 States Receive “Hardest Hit” Funds, 5 More Likely to Follow
The U.S. Treasury Department has approved 5 states’ applications to aid homeowners with foreclosures in an attempt to stem the tide of foreclosures in Michigan, Arizona, Florida, California and Nevada. The funds will be used by the states’ individual housing agencies to supplement principal reduction plans, help unemployed homeowners make mortgage payments and smooth the way for short sales, payoff of secondary liens and deed-in-lieu transactions. North Carolina, Ohio, Rhode Island, Oregon and South Carolina have submitted plans for similar programs and are expected to receive a total of about $600 million in aid.

· Short Sale Surge in Detroit
As lenders try to stem the onslaught of foreclosures in Michigan and across the Midwest, short sale transactions have tripled in Detroit. In the past year, the frequency of this type of transaction has risen 171% in some areas of the state. However, banks are still holding a large “shadow inventory” of REO properties, and this could slow the overall pace of the Midwest market back down when they are put up for sale.

· Experts Predict Deed-in-Lieu Will Surpass Short Sales in Popularity?
The Washington Post recently ran an opinion piece by a real estate market expert predicting that short sales could yield the stage to deeds-in-lieu in the coming months. Banks and lenders are not only gearing up campaigns to promote this transaction, which takes far less time than a short sale, and some are even offering cash incentives.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here:
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As a short sale investor, you are probably simultaneously loving and hating the media right now. On one hand, more sellers are aware of and interested in doing short sales than ever before. They are certainly a more “accessible” subject than they have been in the past. On the other hand, more sellers are operating on heightened alert, fearful that any short sale investor that is not planning on personally moving into their home could be a con artist with a scam at heart that could get themselves and the seller into trouble simply by generating a profit. It is a tough position to be in, and it can be frustrating. After all, you know that you can help a lot of these people, but you have to spend so much of your time defending yourself against things that you would never do – like fraud.

Ultimately, the increased coverage is more positive than negative, and you can make your potential sellers – and buyers – see that with some careful, direct conversation. When you approach a person about short selling their home, make sure that they understand the entire process. Emphasize to them that you have a legal team or advisor that is making sure that everything you do is entirely legal and appropriate in their specific area of the country. After all, there are a lot of new rules governing transparency in short sales, and you do need to be certain that you are meeting all requirements. Explain how the entire process will work, including an application for a loan modification if necessary, and how their property impacts the process. For example, a second home does not qualify for HAMP, while a primary residence may come with mandatory HAMP participation depending on the lender in question.

Your transparency will not only protect you from overzealous, hyper-suspicious buyers who may be a bit too eager to call “fraud,” but it will also reassure average, concerned, distressed sellers who simply want out of their home in a way that causes the least pain possible to their bank accounts and their credit. If sellers ask, draw direct comparisons between yourself and the “bad guys” in the news. For example, the real estate agents awaiting sentence in Connecticut on charges of fraud were deliberately misleading to both the sellers and the lenders. You are going to be completely transparent in accord with your legal obligations, and you have already showed the sellers that by describing the entire process. Once sellers can see that you are certainly in the real estate investing business to make money, but not at their expense, you will find that they will want to help you expedite the short sale in any way possible.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then youare really missing out, go here:
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• Short Sale Servicer Changes Name
  The commercial and residential mortgage servicer “We Save Homes” is now operating under a new name: Servicers Direct. The company announced that it is “poised to experience significant growth in the specialist mortgage market,” one of the main areas of which is short sale processing and negotiations.

• Fannie Mae and Freddie Mac Mortgages Will Get Faster Short Sale Response Time
  Starting on August 1, 2010, lenders on Fannie Mae and Freddie Mac mortgages must respond within 14 days to requests for short sale approval. It is hoped that the measure will help lenders and homeowners resolve their foreclosure issues more quickly – perhaps avoiding the problem all together.  If the homeowner is applying for HAFA programs, the burden of proof of financial hardship is still on the buyer, however.

• Short Sales Up About 50% Compared to this Time Last Year
  Property groups in New York, where short sales are relatively rarer than in other parts of the country, are reporting that short sale transactions are up about 50% in the region over this time last year. In New York, lenders often expect the seller to come to closing with money to clear the remainder of the lien, an expectation that makes short sale transactions considerably more difficult since many sellers cannot afford to meet these closing terms.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then youare really missing out, go here:
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There is certainly no shortage of potential short sale transactions in the current housing market. In fact, according to some estimates, about 1 in every 4 homes for sale is up for short sale. That’s 25% of the market! However, with the advent of government programs designed to help homeowners get short sales done in a smooth and efficient manner by working closely with their banks, the short sale process is, for many investors who relied on creativity to get their deals done and sold off to other buyers, becoming more complicated rather than less so.

Fortunately, not all properties are eligible for these programs, and these properties are far more likely to be distressed than your average primary residence. That’s right; I’m talking about vacation homes. Around the country, second homes are hitting the market in record numbers. In Minnesota, “the Land of 10,000 Lakes,” lakefront properties are succumbing to foreclosure in record numbers as owners struggle to negotiate short sales, while analysts predict a serious foreclosure run on Florida beachfront luxury properties as vacation-home owners in that area try to get out before the oil hits the coast or simply opt to walk away. Second homes are not eligible for federal assistance or short sale programs of any kind in nearly all cases, making them prime candidates for more traditional short sale negotiations. It’s not that the lenders do not want to make a deal; it’s simply that with the huge emphasis on HAMP and HAFA, most people are not aware that they have any other short sale options available.

As a short sale investor, you can help people whose finances and livelihoods are jeopardized by second homes that they can no longer afford and that they are unable to sell in a traditional fashion. These properties are a great source of leads for you for short sales, and often they sell at higher values because they may be considered “luxury properties.” Make sure that you do not overlook this great potential source of deals when you are investigating short sale leads.

P.S. If you haven’t signed up for my Free Short Sale Course yet, then youare really missing out, go here:
http://www.freeshortsalecourse.com/