FISFORECLOSURE INVESTING SYSTEM 2016 LITTLE GREEN BOOK LEGAL NOTICE Copyright Copyright © 2016 by Realeflow All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Permissions Coordinator,” at the address below. Realeflow 6659 Pearl Road, Suite 301 Parma Heights, OH 44131 www.realeflow.com 2 Disclosure These documents and information contained herein are designed to provide accurate and authoritative information with regard to the subject matter being covered. It is given with the understanding that the authors and distributors are not engaged in providing legal, accounting, real estate or other professional advice. If legal advice or other expert or professional assistance is required, the services of a competent professional person licensed in your area should be sought. In the field of short sales, things may constantly change; therefore, it is important for you to do your own due diligence to verify that your current knowledge and information is up to date and accurate. Furthermore, short sale practices vary by geographic location. They also vary according to the type of loan and the characteristics of the note holder and servicer. It is important for you to be aware of those variances. Making or using fraudulent or misleading statements or information in an effort to negotiate a short sale, or the violation of any deed restrictions, short sale affidavit restrictions or other limitations placed by a lender upon a property being short sold, can result in serious criminal actions being brought against all parties involved. 3 TABLE OF CONTENTS LEGAL NOTICE .................................................................................................................................. 2 Copyright ................................................................................................................................................ 2 Disclosure ............................................................................................................................................... 3 TABLE OF CONTENTS ..................................................................................................................... 4 SECTION 1: INTRODUCTION ......................................................................................................... 8 Preface ..................................................................................................................................................... 9 CHAPTER 1: WHY FORECLOSURES ARE A “CAN’T MISS” OPPORTUNITY ......................... 12 CHAPTER 2: WHY IS THIS THE BEST TIME TO INVEST IN REAL ESTATE? ......................... 14 CHAPTER 3: THE FORECLOSURE PROCESS IN THE UNITED STATES .................................. 16 TYPES OF FORECLOSURES .......................................................................................................... 17 CHAPTER 4: OPTIONS FOR HOMEOWNERS AND LENDERS TO AVOID FORECLOSURE . 22 Selling ............................................................................................................................................... 22 Repayment Plans ............................................................................................................................... 23 Loan Modification ............................................................................................................................. 24 Forbearance ...................................................................................................................................... 24 Deed-in-Lieu of Foreclosure ............................................................................................................. 24 Partial Claim .................................................................................................................................... 25 Short Sale .......................................................................................................................................... 25 Foreclosure Auction .......................................................................................................................... 27 REO/Bank Owned ............................................................................................................................. 27 SECTION 2 INVESTING IN SHORT SALES ................................................................................ 29 CHAPTER 5: WHAT IS A SHORT SALE? ........................................................................................ 30 CHAPTER 6: WHY INVEST IN SHORT SALES? ............................................................................ 33 CHAPTER 7: FINDING SHORT SALE DEALS VS. SHORT SALE DUDS .................................... 36 FINDING LEADS ............................................................................................................................. 37 BROAD STROKE MARKETING VS. TARGETED MARKETING ................................................... 42 Broad Stroke Marketing .................................................................................................................... 43 4 Targeted Marketing .......................................................................................................................... 45 Keeping Your Marketing Consistent ................................................................................................. 60 CHAPTER 8: WHAT TO DO WITH YOUR NEW SHORT SALE DEALS ..................................... 61 CHAPTER 9: PROTECT YOUR A$$ETS: PAPERWORK AND CONTRACTS FOR BUYERS AND SELLERS .................................................................................................................................... 64 Authorization To Release Information (See Appendix A) ................................................................. 65 Affidavit Of Understanding (See Appendix B) .................................................................................. 65 Contract for Sale and Purchase (See Appendix C) ........................................................................... 69 CHAPTER 10: NEGOTIATING YOUR SHORT SALE DEALS ....................................................... 73 Getting Short Sale Package Paperwork Signed ................................................................................ 73 Send Authorization To Release Information To Lender ................................................................... 74 Order Your Payoff............................................................................................................................. 74 Put Together A Complete Short Sale Package And Send To Lender ................................................ 76 $20,000 Per Hour Work – The Interior BPO ................................................................................... 80 FHA Loan Guidelines ....................................................................................................................... 83 Getting The Bank To Order The BPO ............................................................................................... 85 Guidelines To A Successful BPO ...................................................................................................... 86 What To Bring To The BPO .............................................................................................................. 88 The Art of the Offer: Flawless Deal Evaluation ............................................................................... 90 Filling Out The CLOSING OR SETTLEMENT STATEMENT ....................................................... 102 Negotiation Tips and Tricks ............................................................................................................ 105 CHAPTER 11: CLOSING YOUR SHORT SALE DEALS .............................................................. 109 SECTION 3: BUYING FORECLOSURES THROUGH AUCTION .......................................... 112 CHAPTER 12 WHAT IS A FORECLOSURE AUCTION? .............................................................. 113 CHAPTER 13: HOW TO FIND PROPERTIES BEING SOLD AT FORECLOSURE AUCTION . 116 Foreclosure Listing Sites ................................................................................................................ 116 County Sheriff’s Office Website ...................................................................................................... 117 CHAPTER 14: THE GOOD AND THE BAD OF BUYING AT FORECLOSURE AUCTION...... 119 CHAPTER 15: HOW A FORECLOSURE AUCTION WORKS ...................................................... 124 CHAPTER 16: TIPS TO BUYING “RIGHT” AT FORECLOSURE AUCTION ............................. 126 5 Attend Foreclosure Auctions ........................................................................................................... 126 Confirm Auction Status ................................................................................................................... 126 Do Your Homework ........................................................................................................................ 126 Research Property Financials .......................................................................................................