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.

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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:
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• Saudi Arabia Allowing Foreign Property Ownership in the Country’s First Freehold City
  Saudi Arabia’s first “freehold” city, called King Abdullah Economic City, will be the first geographic area in that country in which non-Saudi citizens can hold property. The country hopes that this move will help expand the Saudi real estate investing market and create a property explosion to accompany the population explosion that the country has experienced, Emaar Economic City’s chief executive officer told NuWire Investor. French and US companies are already scheduled to inhabit space in the area, along with many other foreign investors.

• Experts Fear that Fannie and Freddie’s Exclusion from Financial Overhaul Could Swamp Taxpayers
  The financial overhaul bill currently slogging its way through congress is designed to protect the “average citizen” from the trials and tribulations of Wall Street and other big investing companies. However, most financial experts agree that if Fannie and Freddie are left out of the bill, the massive debt accrued on the bad mortgages that the two are left holding could leave taxpayers “holding the bill” since banks, lenders and investors are unlikely to want to purchase these poor-risk investments.

• Minnesota Reports Lake Home Foreclosure Trend
  Lake homes in Minnesota, once prime real estate for which buyers might take out second mortgages on their own primary residences just to get a shot at making the down payment on one of these coveted vacation homes, now are plummeting in value and succumbing to foreclosure. The area’s vacation residences have fallen nearly 40% in value, reports the Twin Cities Pioneer Press, and foreclosure rates are jumping by values like 650% in some areas. These homes may not qualify for many “rescue” programs either, since they are often not primary residences, but this does clear much of the red tape out of the way for owners who want to do a plain and simple short sale without having to go through loan modifications and the rest of the federally-mandated processes that are required on primary residences.

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 sales are going to be critical to the recovery of the housing market. With so many homes in foreclosure, banks and homeowners alike are relying on the short sale process to prevent the foreclosure tide from swamping the market and the lenders themselves. However, as short sales are increasingly regulated and the target of more and more media focus, it becomes increasingly important for short sale negotiators – especially if they are real estate investors rather than the next homeowner – to apply stringent rules for full disclosure to their short sale transactions.

Probably the most straightforward way to handle this disclosure is to include the fact that you are doing a short sale in the contract that deals with the transaction. Do not leave anything to chance. Note that you are doing a short sale, how the lenders will be satisfied and make sure that the contract itself allows for the resale of the property, should you elect to do so. You will be on firmer ground if you decide to “flip” the short sale if both the lender and the seller are aware that you may opt to do this.

In addition, many investors and real estate agents are recommending that you stay in touch with all lenders, even if they are the holders of secondary or tertiary loans and are less likely to get any direct satisfaction from a short sale. Making sure that the negotiation meets everyone’s needs or at least addresses their stake in the property can help prevent lenders from coming after homeowners later for the payoff of the remainder of the investment.

If you are listing the property in MLS, you may also opt to disclose the fact that the property is a short sale – or that the owner, lender or both or amenable to a short sale – in the listing. Not only will this attract more attention for your listing since short sales are generally perceived – and rightly so – to be a good way to purchase a property at a discount, but it will also further cover your disclosure bases and make sure that there is no question in anyone’s mind that the transaction that you are negotiating is a short sale.

Ultimately, you can create a great deal of wealth, resolve serious financial crises for people in need, and help stem the tide of foreclosures in the country by being an effective short sale negotiator. However, you must be very careful to “dot your I’s and cross your T’s” when you are doing a short sale. Make sure that every aspect of your behavior and your negotiations are beyond reproach to establish the best short sale transactions you possible can and bring satisfaction to every party in the transaction, including yourself.

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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Thanks to the federal government’s good intentions, short sale experts everywhere could find their negotiations going a bit more smoothly in the next couple months. At the very least, you should be able to get someone to answer the phone.

Thanks to programs like HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternative), banks are about to be compelled to “eat” a great deal of their outstanding debts. Under these programs – which are presently designed to run indefinitely, even though they are functioning at a huge loss and, according to most experts, are simply stalling the inevitable, banks may be compelled to offer homeowners who cannot or do not meet loan modification requirements a short sale option – and forgive much of the outstanding debt based on government-determined criteria that is arguably idealistic and naïve at best.

Why is this good news for private investors? All of a sudden, you represent a far superior short sale option to lenders than you probably did in the past. After all, when you negotiate a short sale, that is exactly what happens: you and the lender negotiate to establish a price that both of you can live with. If the negotiations fail, the lender keeps the property and you leave. Under these new federal programs, however, there are no negotiations. If homeowners meet certain criteria – or, more like it, fail to meet them – then the lender must offer a short sale. Period. And the federal program – not the lender – will determine if the terms of this sale are acceptable. As you can probably imagine, if the lender and the federal government cannot reach an agreement, then there is no walking away. The lender will simply end up on the bottom of that argument and end up having to deal with the terms and conditions determined to be acceptable by the program in question.

Suddenly real estate investors aren’t looking so bad to lenders who are facing, according to most experts, several more years of foreclosures before the market evens out. So although many people are starting to think about getting out of the short sale market to avoid “competing” with the government, federal involvement cannot help but make you look more appealing to lenders everywhere. So if you have been thinking about moving on out of short sales, think again. New federal rules could have banks jumping to answer your calls.

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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Last year, the National Association of Realtors estimated that there were 500,000 short sales done in the United States – about 10 percent of all home sales. That might sound like a pretty big number, but in reality those numbers could be even higher.

There have been a lot of reasons historically for banks, realtors and the press to downplay short sales. Furthermore, many real estate investors, home sellers and homebuyers are not particularly interested in letting everyone know what they are doing when they work on a short sale transaction. It is not because there is anything underhanded about short sales. Much the contrary. However, these transactions take a lot of time and effort, and they have traditionally carried some stigma for the buyers, who are compelled to admit by virtue of the transaction that they are losing their house, not selling because they want to. In short, short sales are hard to report.

In other areas of the country, like some parts of Illinois, short sales made up nearly one third of the home sales in early 2010, and that trend does not appear to be dissipating. So if you are interested in getting involved in short sales, now is definitely the time to act.

You will probably start to see more press on short sale transactions in the coming months. For example, HAFA (Home Affordable Foreclosure Alternative), the federal government’s attempt to control and streamline the short sale process, is making big headlines as real estate investors, property owners and lenders try to determine just how useful this piece of legislation will be. There are a lot of different opinions, but the larger, net effect is that short sales are beginning to feel more accessible to the general public. That is important to you as a real estate investor because a homeowner who has already accepted the idea of a short sale will be much easier to work with, and lenders who are already basically prepared to negotiate will be a welcome change to anyone who has been in the short sale business for a while.

So if you have been considering short sales as a real estate investment or wealth generation option, then now is definitely the time to act. The market is ready for the short sale, and so are your buyers, sellers and lenders.

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/