• 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:
http://www.freeshortsalecourse.com/

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:
http://www.freeshortsalecourse.com/

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:
http://www.freeshortsalecourse.com/

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/

With all the media coverage right now about how you can step outside your door, toss a rock and hit 3 homes in preforeclosure, I have noticed that many people – including some of my clients – are eager to “skip over” lead generation lectures to get straight to “the meat” of the short sale transaction: the profits.

However, just because there are a lot of deals out there does not mean that they are all good, nor does it mean that it will just be as simple as walking up and knocking on the door – although sometimes, it is. Having a variety of sources for good deals – and even having those sources “vet” those deals for you – is a great way to save yourself time and always have new deals on the table when your time and resources permit you to initiate a new negotiation on a new transaction.

Many times real estate investors who are new to short sales think that they have to do all of this on their own. After all, if someone else has the information, won’t they just do the short sales themselves? In reality, however, you can often get free or nearly-free leads on short sales from highly qualified sources just be establishing a few new relationships. Here are 3 fast and easy ways to locate short sale properties:

1. Work with the “We Buy Homes” guy
   You don’t necessarily have to work with the guy behind this specific set of billboards, but remember, behind every bandit sign and billboard with a “we buy ugly houses” or “we buy houses for cash” slogan is an investor with a source of leads – and it’s likely that he or she cannot use all of them, or may have different requirements than you. Find someone compatible and offer to pay them a fee for each transaction that you complete successfully.
2. Ask your local mortgage broker for referrals
   When people try to modify their existing mortgages or to refinance their homes and are turned down, this often indicates a downward slope for the homeowner. You, the short sale expert, can help them escape their mortgage – and you do not have to be the one to break the bad news to them that they have no hope for refinancing because the mortgage broker will already have handled that for you.
3. Work with local realtors
   Real estate agents will be happy to direct you to potential short sales if you let them market the property once it is under your ownership. Real estate agents make great partners because they are frequently quite good at spotting viable short sale opportunities and they also often have contacts within lending organizations.

No matter what part of short sales excites you the most, having a good source of leads is critical to your ability to do these transactions effectively. So get out there and network to create multiple streams of leads for your new stream of income!

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/

Real estate investors looking to help homeowners shed their debts – and their homes – via short sale should beware California’s “tax fix” for upside down property owners who sell their homes via the now-classic method of working with the bank to get the loan forgiven for less than is owed, given that the seller is no longer the owner of the house.

As tax season looms, homeowners who did the right – but painful – thing and worked out an agreement with their banks or lenders to forgive a portion of the debt via short sale are finding that their financial crisis resolution may have created a tax debt for tens of thousands of dollars. How? Because the governor of California vetoed a bill containing protective legislation that would prevent that forgiven debt from being considered taxable income.

Turns out, the real issue with the legislation has nothing to do with short sales. Instead, Governor Schwarzenegger vetoed the bill because it contains penalties for filing unfounded tax refund claims, but those penalties are restricted to high-income filers. Basically, the bill contains language that says unless you make a lot of money, you can make unfounded tax refund claims. Earn too much and mess up your return, though, and you are on the hook with the IRS. Governor Schwarzenegger doesn’t think it’s fair and refuses to sign this type of legislation.

However, political leanings aside, this gridlock between the governor and the legislature is really hurting homeowners who did short sale transactions in 2009 and it could continue in this state until the governor and the legislature manage to “duke it out.” The governor refuses to sign tax bills with the problematic income tax refund language, and the legislature refuses to send a bill without it. The stalemate really does start to look a little suspect when you note that then-President George W. Bush signed nearly identical legislation in 2005 that simply stated that unfounded tax refund claims could be punished, regardless of your income. It looks like the legislature just doesn’t want to lose the taxable income on the short sales from a skeptic’s point of view.

But ultimately, how you feel about the legislation in question is not the point. The taxable income of hundreds of thousands of dollars in forgiven debt is the issue at hand for short sale negotiators and real estate investors. Short sale transactions can enable you to purchase a home for pennies on the dollar in many cases, but at least in California, someone is going to have to pay the piper even if the lender forgives the debt. So if you are involved in short sales, check the tax ramifications for both you and your buyer before you sign on the line. You do not want to create a new crisis instead of solve one.

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/

While in general, when the government starts regulating real estate it tends to indicate coming trouble for real estate investors (just think “seasoning” and experience a cold chill), in the case of the federal government’s Home Affordable Foreclosure Alternatives (HAFA) the jury is still out. The regulations are designed to streamline short sale rules and provide incentives and encouragement for borrowers and lenders to work together, hopefully making the entire process less tedious for the homeowners and, theoretically, for the third parties like investors as well.

At first, it sounds pretty good. The seller has access to a preapproved list of short sale terms from the lender before they ever put the house on the market. This is great for the seller because they know what they are working with and do not necessarily need someone to hold their hand to get the thing done, right? Maybe. Let’s remember that these preapproved terms have not been negotiated by a third party (like an investor); they have been agreed upon between seller and lender, both of whom have a vested interest in keeping that sale amount high. After all the lender wants to recoup as much of the loss as possible, and the seller wants as little remaining debt as possible – especially since a number of lenders have started going after sellers who thought their short sale had put them in the clear. But for now, let’s continue to focus on how HAFA works rather than how real estate investors may feel about it.

In reality, HAFA may not actually speed things up all that much. In order to qualify for the program, the seller must first enter the Home Affordable Modification Program (HAMP) and attempt to modify their existing loan. HUD says that over 100 servicers are currently signed up to participate in HAMP, but as most investors are aware, most loan modifications are basically just lead-gen for a short sale that add 6 to 12 months to the process. In addition, a lot of motivated sellers are not going to make it through the HAMP part of HAFA anyway, because if they miss a payment during the qualification period – and remember, they’re already in trouble – or if they do not qualify for the loan mod, then they are out of luck with HAFA.

Basically, HAFA is probably a pretty well-intentioned piece of legislation. However, it does not appear that it will really impact the short sale market all that significantly in its present form, and it definitely is going to leave a lot of people out since the property has to be a principle residence, the mortgage has to be owned by Fannie or Freddie, the borrower has to be delinquent, but then cannot miss payments, and the housing payment must be more than 31 percent of gross household income. With all these stipulations in place, it appears that while HAFA may make the process more accessible in homeowners’ eyes – and that’s a good thing – it may not have a truly dramatic impact on the short sale aspect of today’s housing market.

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/