Charles Gardner-Real Estate Consultant

Cultivating Relationships that Matter

When it comes to investing in short sales or simply conducting business in everyday situations it's more important than ever to build strong, effective and reliable relationships that won't let you down. If you are new to short sales it is even more important to understand how to navigate these "people problems" to avoid problems and set the stage for profits. Learn how to begin cultivating relationships that matter with these quick tips below:

Tap into a Team. You have heard about teamwork for years but have you ever really put it to use in your own investments? Sit down and decide who to put on your "dream team" then set out to recruit, hire or volunteer until you have the talent and expertise needed for success. Bankers, brokers, insurance agents, mentors, apprentice, workers, repairmen and others are just a few examples of people to know.

Give - Generously. Nobody likes a 'taker' or 'user' so set the stage up front by giving of yourself...generously. Everyone has something to offer - whether you exchange information or hard labor, make it obvious that you value the contribution and will make it worth their time and effort.

Ask & You Shall Receive. Believe it or not, one of the most effective ways to build relationships that really matter is simply to ask. Be straightforward and share your goals, insight and needs openly and truthfully...then ask for help.

Reward - Never fail to thank those that show a personal interest in your success...no matter how large or small. Gratitude never goes out of style and often it is the simple things that make a major impression upon others.

Make a point of acknowledging and showing your appreciation for any gesture - large or small. Remember, a small matter may demonstrate the type of talent and aptitude deserving of larger attention by big players in the future. Don't neglect the details.

Become Super-Supportive- Cultivating relationships that matter means forming a circle of trusted advisors, experts and others that simply will not allow you to fail. Likewise, you must also become super-supportive in return. Learn how to initiate networking, make meaningful meetings that could assist others even before they ask and stay alert for opportunities that could benefit others even if you are unable to take advantage of it.

Shed the "Self-Made" Myth-Few ideas have done more harm to individual investors than the concept of the self-made man...plain and simple, it doesn't exist. Everyone, to some extent or another, has help and support from someone. Perhaps it is a spouse, the assistance of a good job or merely a competent broker...rather than reluctantly accept help - learn to embrace it instead. It's not a character defect but rather reality...invest in your own success by cultivating real relationships that build the foundation of success needed in your short sales career.
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See you on the other side!

Charles Gardner-Real Estate Investor

http://humble-homz.com

The Future of PPIP and Short Sales

With the recent expansion of incentives designed to increase short sale closures, many would be real estate investors may have come to the conclusion the current administration is investor friendly. However, exactly how friendly and in what format may still come as a surprise.

The PPIP or Public Private Investment Program is one of the more recent plans proposed by the administration as a way for banks to sell toxic assets and other securities to private investors. The idea was to eliminate much of the risk associated with the purchase of these assets through a government sponsored initiative that would use up to $100 Billion dollars in federally funded (taxpayer supplied) funds in conjunction with up to $400 billion more from private investors and FDIC financing. The program was supposed to begin within weeks as of the date of this writing.

So, what is the problem? In a nutshell, banks now want to buy the troubled assets themselves! Yes, you are reading this right...the banks that have been trying for months to sell foreclosed homes and rid themselves of non-performing mortgages and other securities now want to turn around and buy them using even more taxpayer bail-out dollars...and why not? With the government footing the bill for well over 90 percent (plus) of the loan, it's a win-win for large institutional investors. On the one hand, the banks get federal funds to 'bail them out'. On the other hand, they get even more funds to repurchase those same assets - for a fraction of the cost - and then profit on them.

Sheila Bair, Chairman of the FDIC, has come out with an official statement that essentially states banks will not be allowed to purchase their own impaired assets...but to date, no mention has been made of banks purchasing non-performing assets from other banks. So, what is to stop Citigroup from purchasing assets from Bank of American and vice versa rather than simply purchase their own? In the long run, it will matter little to the American public that foots the bill for one of the largest transfers of wealth in the history of the nation.

Now ask yourself, if banks are trying to get in on the action of buying "toxic assets" - why aren't you? The PPIP is targeted to major institutional investors (including banks) which only make money if those same assets are expected to go up in value over the coming years. Now may be a good time to consider the recent admonishment by Marc Faber who believes the United States is heading for Zimbabwe type hyper-inflation...

"I am 100 percent sure that the U.S. will go into hyperinflation," Faber said. "The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate."

Prices may increase at rates "close to" Zimbabwe's gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe's inflation rate reached 231 million percent in July, the last annual rate published by the statistics office."

Marc Faber knows it. The banks know it. The federal government knows it...inflation is the name of the game for the coming economy and real estate is one of the only measures the average person can take to protect themselves against the ravages of inflation. You can bank on it!
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See you on the other side!

Charles Gardner, Real Estate Investor

http://humble-homz.com

News for Short Sales Investors and Others...Particularly Realtors

Short sales are complex transactions involving careful coordination and close cooperation among a number of parties -- servicers, appraisers, borrowers, purchasers, real estate brokers, title agencies, and often mortgage insurance companies and junior lien holders. A short sale usually provides a better outcome for borrowers, investors and communities, but because of the complexity and time involved, servicers have often opted to pursue foreclosure instead, even where a short sale would have provided a substantially better outcome for everyone involved. The Making Home Affordable (MHA) Program provided additional details yesterday on its plan to stabilize the US housing market and prevent avoidable foreclosures, and it is good news for short sales.

The foreclosure alternatives for borrowers eligible for MHA include:

- A Short Sales/Deeds-In-Lieu Program to Facilitate Foreclosure Alternatives

- Incentives for servicers to pursue alternatives to foreclosures

- Borrower incentives to cover relocation expenses to homes that are affordable

- Streamlined process combining short sales and deed-in-lieu transactions

The Foreclosure Alternatives program will provide incentives for servicers and borrowers to pursue short sales in cases where a borrower is eligible for a MHA modification but unable to complete the modification process. It provides a standard process flow, minimum performance timeframes, and standard documentation, and offers financial incentives to servicers and borrowers.

Fourteen servicers, including the five largest, have now signed contracts and begun modifications and refinancing under MHA, and including both these servicers and Fannie Mae or Freddie Mac, more than 75 percent of all loans in the country are now covered by the MHA program.

Further details on short sales and the MHA:

When a borrower meets the eligibility requirements for a Home Affordable Modification (HAMP) but does not qualify for a modification or cannot maintain payments during the trial period or modification, the MHA Program recommends a short sale to avoid the foreclosure process. This helps the borrower sell a property for less than the amount owed, helps the lender avoid the costs of foreclosure, and helps you get properties at bargain basement prices.

US Treasury Department News Release dated 05-14-2009:

How The Home Affordable Short Sale/DIL Program Works:

- Borrower Eligibility. Borrowers will be eligible for the Foreclosure Alternative Program if they meet the minimum eligibility criteria for a Home Affordable Modification but did not qualify for a modification or were unable to sustain payments under a trial period plan or a modification. Prior to proceeding to foreclosure, participating servicers must evaluate each eligible borrower to determine if a short sale is appropriate. Considerations in the determination include property condition and value, average marketing time in the community where the property is located, the condition of the title including the presence of junior liens and a determination that the net sales proceeds are expected to exceed the investor's recovery through foreclosure Incentive Payments.

- Servicers may receive incentive compensation of up to $1,000 for successful completion of a short sale or DIL.

- Borrowers may receive incentive compensation of up to $1,500 to assist with relocation expenses.

- Treasury will also share the cost of paying junior lien holders to release their claims, matching $1 for every $2 paid by the investors, up to a total contribution of $1,000 by Treasury.

- Standardized Documentation: The program will publish streamlined and standardized documentation, including a Short Sale Agreement and an Offer Acceptance Letter. These documents will outline specific marketing terms, describe the rights and responsibilities of all parties and establish clear timeframes for performance. Creating one standard set of documents that the industry can use is expected to minimize the complexity of these transactions and significantly increase use of the short sale option.

- Property Valuation: The servicer will independently establish both property value and the minimum acceptable net return in accordance with investor guidance and will provide instruction to the borrower regarding the list price and any permissible price reductions. The price may be determined based on either: (1) an appraisal performed in accordance with USPAP and/or (2) one or more Broker Price Opinions either of which must be dated within 120 days of the Short Sale Agreement.

- Minimum and Maximum Duration: Under the program, servicers will allow borrowers at least 90 days to market and sell the property, with possibly more time based on local market conditions. The property must be listed with a licensed realtor experienced in selling properties in the neighborhood.

Marketing of the property may run concurrently with the foreclosure process; however no foreclosure sale can take place during the marketing period specified in the Short Sale Agreement as long as the borrower is acting in good faith to sell the property. There will be a maximum marketing period of 1 year for the property, provided any longer period not otherwise delay foreclosure sale, to ensure diligence by servicers and borrowers in moving as quickly as possible to complete the short sale and deed-in-lieu process.

- Selling Commissions and Fees: Reasonable and customary real estate commissions and selling costs that may be deducted from the sales price will be specified in the Short Sale Agreement. The Servicer will agree not to negotiate a lower sales commission after an offer has been received.

- Fees and Charges: Servicers may not charge borrowers fees for participation in the Foreclosure Alternative Program.

- Property Eligibility: Any junior liens, mortgages or other debts against the property must be cleared for the property to be sold as a short sale or deeded to the servicer. The servicer can proceed with a short sale or deed-in-lieu if there is a reasonable belief that all liens on the property can be cleared.

- Program Expiration: Eligible borrowers will be accepted until December 31, 2012. Program payments will be made upon successful completion of a short sale or DIL.

- Deed-in-Lieu: At the servicer's option, the Short Sale Agreement may include a condition that the borrower agrees to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time specified in the Agreement or any extension thereof. In this case the borrower would have 30 days to vacate the property and would be entitled to $1,500 to assist with relocation expenses, in addition to any other funds the servicer may provide to the borrower.

See you on the other side

Charles Gardner

Short Sale Investor

Did YOU see this Letter to the Editor??

Letter to the Editor, Tampa Tribune:

I understand why your reporter focused on my colorful hair and YouTube marketing videos in her story about Short Sales Riches, our business model for helping homeowners close "short sales" and avoid foreclosure judgments.

But by emphasizing the critics, she missed the context for why our business is having such success.

This is an unprecedented time in the housing market. More than half the homes for sale are distressed properties, including short sales, where banks agree to accept less than what is owed in return for the homeowner's help in selling the house.

But ask any Realtor and you'll hear the problem: short sales have become "long sales" because the banks - and there are generally two involved - take forever to agree on the price and split of the proceeds. As a result, Realtors don't want to show short sales much anymore. They didn't get into real estate to negotiate peoples' debts with banks.

Our business places option contracts on promising homes that face foreclosure, triggering the appraisal and sales process. We hire a negotiator to do the back-and-forth work with both lenders and find the bottom-line price. Once we can market a sales price as pre-approved, the property becomes much more attractive to buyers, who have also become leery of short sales.

Your readers should know that when the homeowner accepts the option contract, they also receive a signedRelease Of Option agreement that can be exercised at any time. If for any reason they want out, we will withdraw. But our experience is that sellers are happy to have someone show an interest in their property, in hopes they might avoid foreclosure. We have yet to have a single complaint!

We also give the homeowner an extensive Affidavit of Understanding that makes them aware of possible taxable events or deficiency judgments, inherent in all short sales or foreclosures. But in our case, to close some deals, investors have agreed to pay back-due homeowner association fees and gotten banks to waive deficiency judgments, benefits not generally seen in today's market.

Your article said that lenders might object if they knew we planned to resell the property. But they do know, because we tell them! And as other documents provided to your reporter made clear, banks are routinely rejecting short-sale offers, only to see the property sell for far less at foreclosure. By negotiating a pre-approved price, we are getting houses moving.

Short Sales Riches is an entrepreneurial response to a housing market facing unprecedented challenges. The Wall Street Journal reported last month that because of snags with second lenders, just 51 loans have been modified since Congress passed the $320-billion Hope for Homeowners program last July. During that same time, my negotiators have helped me close more than 51 sales in Tampa Bay alone!

It's easy to criticize people who make money in today's real estate market, but real hope for homeowners isn't going to come from Congress or Wall Street fat cats. This private-sector messenger might have crazy hair and funny YouTube videos, but he's a real guy who's been in the trenches and knows how to work with lenders to give homeowners true hope they can bank on.

Do YOU Never Say No?

One of the first lessons to learn about negotiating the biggest profits when working with short sales is to never say no. While most of life's important lessons tend to revolve around saying no in one form or another, the central premise to reaching an agreeable negotiation is to simply never say no. As long as both parties are still talking, there is enough room to reach an agreement.

Learn how to never say no even in the toughest situations by implementing a few of these great tactics for your next short sale deal:

Nurse the negotiations rather than simply saying no. Instead, find out what needs to be paid, when and how much? Are they willing to accept anything in trade? Is there another way to finance it such as holding a note or seeking out a partner? Learn everything you can about what is needed, by who and when then set out to find a solution that will work for both parties.

Use a simple "IF/Then" phrase. For example, "If I am able to provide xx by xx then will you agree to the terms of my deal?"...keep going until they say "yes" then put it into writing via a formal or informal contract.

Create a Sense of Collaboration. Validate their needs and goals prior to initiating your own. Let them know you are seeking to create a win-win situation that will benefit both of you then ask what they need to make that happen. Be sure to share what you need from them and why...remember, people that use the phrase "because" are more successful in obtaining their goal even if the reason isn't all that important. Simply creating a sense of collaboration is an important step in negotiating a reason to work together rather than selecting sides with a winner versus a loser.

Simply Don't Stop. One of the most simple and easily overlooked strategies is to simply don't stop. Even if a deal appears to go sour always leave the door open by presenting a written option or alternative. Deals often go bad so make it easy for people to contact you in the future. Allow them to save face by keeping the tone neutral and the relationship friendly. Research shows they will be even more willing to work with you in the future if the first attempt fails and you respond positively and friendly. Rather than being viewed as an adversary, keep the lines of communication open by presenting a neutral yet friendly demeanor. You can still walk away from the deal while allowing them the time and opportunity to contact you in the future.

See you on the other side

Charles Gardner,

Short Sale RE Investor