6 Case Study of Agent Partners Role



A summary of the step-by step process for agents using our program.

[gview file=”http://daytonaforeclosurepro.com/wp-content/uploads/2013/11/Our-Process-2.pdf”]

It is assumed at this point the homeowner has explored all of their options for keeping the home and the typical short sale process has been explained to them.

Pre-screening the seller and qualifying the property using our pre-screening questionnaire is the first step. The questionnaire was designed to provide us with enough details to determine if the prospective property meets our criteria for an offer. This questionnaire will save everyone a lot of time if used correctly.

To the Seller: In order to begin the process we will need you to complete a questionnaire that will help us understand the details surrounding your particular situation and the property so that we can begin to formulate a plan. The questionnaire was designed to help us identify all of the liens and judgments that are clouding the title and must be cleared in order for the property to be sold free and clear. All information provided to us is keep completely confidential and will only be used to evaluate the transaction so that we and our professional negotiators know exactly what needs to be addressed. We have several options for providing this information:

  1. You can complete it online here. This link will also provide you with valuable information that will help you better understand the short sale process via email.
  2. Your agent can complete the information here.


Once we have reviewed the questionnaire and decided that it qualifies per the lenders qualifications for a short sale, our purchasing criteria, and we are ready to make an offer we will supply a homeowner packet containing all the contracts and agreements for that specific property.


Please schedule a time to meet with the homeowner and explain how our program works, the contracts and agreements that we use and answer any questions that they may have. Leave the contracts, agreements and short sale checklist with them (For a period of three days- per Florida Staute 501.1377) and have them begin gathering all of the information and supporting documentation using the checklist. At this time there are only three documents that you should have in your possession when leaving the first appointment.

  1. The Mars Part I
  2. The Letter of Authorization
  3. The Document Receipt for compliance with the Florida 501.1377. This documents the delivery of documents and begins the three day period.

Please Re-schedule to pick them up after a min. of 24 hours has passed (Florida Statute 501.1377).

Important: You should impress upon the seller that you need a complete document package with no missing documents that are required by the lender. Encourage them to utilize the checklist provided to make certain that they have ALL of the required documents. When you return to collect the documents please use the Administrative checklist we have provided you to make certain that you have a completed package. Don’t just assume that the seller has given you everything. If there are missing documents please ask the seller to collect the missing documents and leave the entire package with them until they have everything you need. Otherwise the seller often thinks that you have begun working on their short sale when in fact we can not submit an incomplete package. By leaving the package with them until it is complete they will have a greater sense of urgency to get ALL of the documents collected before calling you back for another appointment.

Submit your short sale package by uploading it through our paperless document system (Realeflow Investor), have us sign the “Listing Agreement” and Pend it Contingent on the MLS. If you have not already registered for an account with Realeflow you can do so at www.relsubmit.com. This will give you access to all of the files you are currently working on and keep you updated each time our negotiations team has called on or updated the file so that you can keep the seller updated on the progress.




Property: 3BR/2BA, 1,500 SF House that needs $5-9K in paint/carpet/cleaning

Debt: $200,000 loan balance, one mortgage

Value: Comps between $140-190K in past six months, estimated $150K sale price.

Realtor gets short sale lead. Figures out that the house has no equity, is in the right area and the seller has a legitimate hardship and qualifies per the investors purchasing criteria of 3/2 or better in a neighborhood that if priced right would sell quickly. It’s Time to call the Investor.

Realtor emails Investor’s assistant and asks her to prepare the Purchase Contract package and email it directly back. The realtor indicates that they feel that the property could be sold quickly if priced right at around 160k and provides a cma to support her conclusion. The CMA contains the lowest three most recently sold listings and the three most highest sold listings.

The Investor contacts their BPO agent and requests a conservative CMA or Desktop Appraisal. The BPO agent comes back with the same conclusion and submits their CMA for the negotiators file. At this point we are not under contract yet we are just simply asking our BPO agent to validate both the agents assumptions and our opinion of what the property might be valued at during a BPO appointment and what we might be able to sell the property for if priced right.

The Investors assistant emails the homeowners short sale package back to the Realtor and they are now ready to meet with the sellers.

Realtor receives package and goes out to meet with the Sellers. Agent explains to them how the process works and that they do short sales with the Investor because he and his team have a proprietary system in place that has proven to get results. He gets the process started with the Bank right away by putting the house under contract using an Option. They won’t have to wait weeks for an offer to send to the bank while the Bank inches closer to a foreclosure sale.

Agent reviews the document package with the sellers and encourages them to seek any legal or financial advice they may need in order to be completely comfortable with the process. Agent has the sellers sign the LOA, MARS Part I and the Document Receipt. A new appointment is scheduled to pick up all of the documents in three days.

Agent meets with the sellers in three days and gets the Sellers to sign the short sale paperwork and collects all of the necessary financial info and hardship letter for the Bank, as well as contact information for the Bank.

Agent makes a copy of the package for her broker’s file and gives all original documents to Investor’s assistant. The investor must have the original, notarized Affidavit of Understanding and the Notice of Purchase and Sale Agreement. Assistant emails Investor’s BPO Agent with instruction to prepare a conservative BPO along with an estimate of repairs and pictures of the house.

BPO Agent completes his report and emails it to the Investors Assistant and the Negotiator. Negotiator now has pictures of the house, a completed BPO and an estimate of repairs. The “quick sale, as-is” BPO comes in at $135K.

BPO Agent emails the Assistant to put together a proposed HUD-1 for the Bank indicating a $1OOK purchase price with a 6% Realtor commission, 6% in seller concessions and a 1% negotiation fee. All doc stamps, title fees, prorated items and usual & customary costs of sale appear on the seller side, so the Bank nets around $82,000. The Seller receives $0.

Realtor puts the property on MLS right away at 135k which is what we think we can get a conservative BPO completed at. The Listing is marked “Pending Contingent” until the banks BPO is completed. The Agent remarks at this time say “Short Sale has Been Initiated. Seller prefers listing agent be present for all BPO showings/appraisals. Cash only No FHA offers will be accepted.”

The Assistant puts the HUD-1 together and emails it to the negotiator, who is now the only party authorized by the Seller to deal with the Bank on the account because the Bank has received a signed Authorization to Release form.

The Negotiator has submitted the entire short sale package to the Bank and is waiting for it to be assigned to a loss mitigator and makes a request for the Bank to order its BPO immediately.

Now 15 days go by. The Negotiator has made follow-up calls twice a week. The Realtor has seen some action on the house but no additional offers, most likely because it is a short sale and no one wants to wait around. The market has taken a slight drop because two REOs (bank owned properties) down the street just sold for $135K and $145K.

The loss mitigator tells the Investor’s negotiator that a BPO has been ordered. The Negotiator emails the Investor’s BPO Agent and tells him to get ready.

The BPO Agent updates his BPO to reflect today’s market conditions. With the new comps and the increased inventory, the updated BPO comes in at $130K (“quick sale, as-is”).

The Bank’s BPO agent calls the Negotiator, who puts her in touch with the Investor’s BPO Agent, who schedules the inspection for the following day.

The next day the Investor’s BPO Agent meets the banks BPO agent at the house and takes along the following items. Before proceeding the Investors BPO agent verifies that the person they are meeting is the actual BPO agent assigned to the file and requests identification and a business card. This will be used to later follow up with the agent once the BPO has been submitted.

  1. A copy of the contract.
  2. A list of the repairs.
  3. The Hardship Letter showing the agent that it is a short sale
  4. A detailed market analysis showing which way the market is trending and
  5. A cover letter explaining the situation to date. The letter states that they’ve sent a $1OOK offer to the Bank, which they realize is a bit low, but that they have had no success in getting a higher offer. The house has been on the market for 45 days, currently listed at $135k with no takers. The Investor’s BPO Agent shows the Bank’s BPO agent his $130K BPO and explains the comps, repairs and market conditions that led him to that valuation. He gladly shares a copy of his BPO with the Bank’s agent.

The BPO Agent calls the Bank’s agent the next day to ask if the report is done and what it came in at. The “only reason he wants to know” is so they can make sure the house is priced correctly, because he isn’t so sure the $1OOK offer is going to fly. The Bank’s agent says she can’t tell him exactly what it came in at, but “hints” that the number was only about $5K off. The BPO Agent now knows the Bank’s value is around $135K.

The BPO Agent submits a report that explains to the Negotiator and the Realtor what has transpired. The Realtor is really starting to get a lot of calls on house. The Realtor apprises the Investor about what is happening and, based on the fact that they have a pretty good BPO, it’s looking pretty good. She also advises that it would be much easier to sell if a few hundred dollars could be spent on debris removal, lawn maintenance, and a maid to scrub down the interior. The Investor fronts the money and it is all done.

Another two weeks go by when the Negotiator gets a call from the Bank advising that the offer is too low and needs to be closer to $135K. Also, they are not sure if they could do the requested concession or not and would have to get that approved by their investor. In response, the Negotiator raises the offer to a $125K purchase price, throws out the negotiating fee, but keeps the concession the same, as well as all normal fees and proration’s. The net offer to the Bank is now at $105K (just under 80% of the BPO) and appears to have a good chance of going through.

The Investor instructs the Realtor to unpend the listing, raise the price to 170k and place the following into the MLS remarks: “Short Sale Verbally Approved. Listing agent has received verbal short sale approval and just needs full price offer to move forward.” Now the Realtor’s phone is ringing. Although there are cheaper houses down the street priced at $135K and $145K, they are also short sales and those list prices are not approved because the listing agents on those houses A) have done nothing with the Bank and B) have no signed offers.

Another week goes by. The Bank’s loss mitigator says everything looks good, except his boss will only approve a 3% concession. The Negotiator says he thinks he can make that work and tells the loss mitigator to go ahead and submit that to his investor for approval. The net offer to the Bank is now right around $109K.

The Realtor receives two offers on the house. The first is for $170K, but the buyer wants 6% in seller concessions and is getting FHA financing. The second offer is for $145K. The buyers are putting down 20% and have a good relationship with their Bank. The Investor instructs the Realtor to counter the $145K offer at $160K.

The property goes under contract for $160K with a closing date set for month end. However, the contract states that the Seller can extend the closing date an additional 30 days (to protect himself in the event the Bank drags its feet on the short sale.) We have a Buyer!

Investor tells Realtor to inform the Buyer’s agent to go ahead and order the appraisal and inspections, and plan on closing at the end of the month (even though he hasn’t received a written short sale acceptance from the Bank yet). The Investor agrees, in writing, to reimburse the buyer up to $600 to pay for costs of appraisal or inspection in case anything on his end falls apart. Investor instructs his title company or real estate attorney to prepare as necessary.

Another two weeks go by, the end Buyer’s appraisal and inspections are done and the Negotiator has a written short sale acceptance. The approval letter is good for 30 days and the Buyer can close in two weeks because everything is just about done.

The A – B transaction closes on the 14th and the B – C transaction closes on the 15th. The Investor’s net on the B – C sale is around $150K after closing costs, 3% to buyer’s agent and prorated taxes, for a net profit (on the entire short sale and subsequent re-sale) of $25K.

Understanding Florida Statute 501.31377->


Retail Buyer vs. Real Estate Investor

Which is the better option?

In our hypothetical scenario, we have two properties. They are identical..

They are sitting across the street from each other. Their respective buyers purchased their properties at the same time for the same price and they both financed their properties with an 80/20 first and second mortgage combination.

We will assume that as time passed both of these homeowners went into default and they found themselves in a negative equity position.

  • The homeowner on the right hand side of the street chose to do a short sale with an investor and have the investor be the buyer.
  • The homeowner on the left hand side of the street chose to do a short sale as well, but they preferred to look for a long-term end buyer.

Now these two homeowners have identical houses with the same pricing. They have the same mortgages (80/20 first and second) with the same two lenders. In both deals, the banks had BPOs (Brokers Price Opinion) completed and they come back with their response.

The bank of the first mortgage says that they will allow the second mortgage company to have only $3,000.00 towards their $30K second mortgage. The company for both second mortgages responds by saying that they will not take anything less than $10,000.00. The house on the left hand side of the street that has the ultimate end buyer who persisted through the short sale does not have the other $7k to make up the short fall.

Even if this buyer knew how to strike a deal with the second mortgage holder outside of the short sale closing, they do not have the resources to bring in the short fall and fund the deal. The house on the right hand side of the street with the investor-buyer has an advantage because the investor understands what to do and knows they can pay the other $7K out of closing. Either they have access to the cash or they can pay the other $7k on the buyer’s side of the HUD-1. In either case, it can satisfy both the first and the second mortgage requirements and they are able to get the short sale approved.

The investor goes ahead and re-sells the property making a $20K profit.

Unfortunately, for the homeowner on the left hand side of the street, their buyer went away because they did not have the other $7,000.00 to satisfy the second mortgage. They were very frustrated.

They did not know what to do and they gave up the property. The next thing they know, the auction date is 30 days away, and the home ends up going to sale (auction sale) at the end of the 30 days. 6 months later the seller finds out that the lender is now filing for a deficiency judgment. The seller later decides to file a bankruptcy and in the end the seller ends up with a foreclosure, a deficiency judgment and a bankruptcy on their record all of with could have been avoided had they worked with the real estate investor like the seller on the right hand side of the street.

Realtors need to be aware of these possibilities and they need to be able to explain them to homeowners.

Understanding Florida 501.1377