If your job is real estate investing, then you would know that buying foreclosures can be very profitable. Most of these homeowners are reeling under huge mortgages. They may have massive loan payments and have no equity at all. In fact, for some, the debts are more than the property that is owned by them.
The situation may not look attractive to most investors, because the profit is not obvious. But in real estate investing, you can make your own equity and negotiate a short sale with the lender or the bank.
How To Influence The Appraisal
When doing short sales it is imperative to know the most important secret of all. If an investor with the greatest negotiating skill does not know the secret, he will not be successful. Any investor with the right paperwork or with a perfect case of low value including repair estimates will fail without this secret.
The secret is to get big discounts from a lender on a property that is facing foreclosure. To do this you should be able to control the Broker’s Price Opinion, known as the BPO. A BPO is a value appraisal done by a bank. When the bank receives a short sale package, they send out a real estate agent or Broker to judge the value of the property.
The bank appoints an agent or broker. His job is to visit the property and give his opinion on the value of the property as he sees it. This is where your skills of real estate investing come in.
You should be able to influence the opinion of the broker, especially because opinions are totally subjective. It is then possible for you to earn a fair amount of money in a short time period and with little effort. There are four important steps that you should follow, which will help you to achieve your goal.
Steps To Your Success
Real estate investing is all about selling your short sale package effectively. You have to start the whole process by a thorough research of the situation. First of all you should inspect the property with a real estate broker and gather valuable information about it. Make a list of the repairs and an approximate estimate for them. Take photographs of the property, especially the cracks and any other damage. Gather information about the family, the neighborhood and other local factors. Make an offer to the loss litigator in writing and attach all the papers required for the deal.
The next step for you would be to influence the Broker’s Price Opinion. Make sure that the BPO agent goes to the property only with you. Your goal should be to make sure that the agent sees the property through your perspective. Show him the package that you have prepared and since the agent is simply doing his job and has no personal income from it, you can attempt to plead your case and request him to ask for the lowest BPO possible. It is important to remember, that normally in real estate investing, agents and appraisers ask to value properties at the high end of the scale. Point out the flaws in the property and be assertive, but do not annoy him.
If you are unlucky and the bank rejects your short sale due to the BPO, just request a second opinion. Carry all the material that you have prepared in support of your case and even offer to pay for the second opinion if the bank is unwilling to pay for it. Use the sympathy factor and familiarize the BPO agent with the sad story related to the foreclosure. If there is a difference in the valuation of the BPO, your case becomes stronger. In real estate investing you have to work towards making sure that the bank agrees to the deal.
It is time for you to close the deal. If the second BPO is drastically different, you may be lucky that the bank will agree to negotiate down. Real estate investing requires a lot of negotiating, and you might still have to work on it, before the bank actually accepts. But sometimes, you may be unlucky and the bank may totally disagree with you. In that case, it is best to move on to the next deal. Sometimes it is for the best, but with every deal one learns from mistakes and rectifies them in the next one.