1.      How much does FRG charge to manage and negotiate each short sale?

FRG first bills the lender for its service fees and usually is reimbursed by the lender 70-80% of the time meaning no expense to the seller or agent. There is never an expense for our services to the seller. Short Sale transactions where the lender does not reimburse FRG for mitigation fees, FRG bills 0.75% of the sale for its mitigation services to the buyer’s and seller’s agent that is disclosed in the Buyer’s addendum contract.

2.     Why will lenders pay for loss mitigation fees associated with a short sale?

First lending companies are use to paying loss mitigation fees the last couple of years where they paid thousands of fees to negotiators doing loan modifications. Management at lending companies have finally started applying true ROI (Return on Investment) models on foreclosure costs. Lenders including Government lending programs apply financial models that measure entire carrying costs on what true values are which determine a true ROI. These new management strategies caused lenders to invest time and money into achieving faster processes to achieve sales quicker. If FRG causes the sale to be sold two weeks faster, the lender will many times recover the fees they pay FRG by reducing their carrying costs most of the time. With FRG’s process of managing short sale contracts, FRG is usually able to cut 3-4 months off the short sale process ordinarily seen with Real Estate Agents trying to negotiate their own sales. A lender averages approximately $4,000-$5,000/mo. in carrying costs in an average foreclosure home if you are applying the industry standard Craig Forcardi/Tower Group study showing an average foreclosure costing the lender $58,759.00 in total costs. In other words our ability to get a short sale completed faster pays for any fees

3.     How does FRG bill lenders for their mitigation fees?

Each lender is different in how they want the fees billed. However, the fees are billed and listed on the HUD and paid at closing directly to FRG. Lenders will pay FRG directly in 70-80% of the short sale transactions.

4.     What is my role as a Real Estate Agent in the short sale process?

The listing agent simply needs to list the home and have the homeowner sign all the required paperwork and then forward to FRG. FRG does everything else.

5.     How does FRG’s 6-week Pricing Strategy work and what percentage of the homes sell in 6 weeks?

Most agents who implement FRG’s pricing strategies report over 80% of the homes are under contract in 4 weeks and almost 100% by the 6^th week. Sometimes market conditions and timing of market events like home tax incentives end of year, April tax deadline, Christmas and summer holidays can increase or lower the success. Agents also report, the 6-week pricing strategies help prevent potential buyers from making lowball offers because the property is being sold in a reverse auction format. FRG creates specialized and unique pricing strategies for each home depending upon many factors including foreclosure status (time left before foreclosure complete) location, original home value, seller’s financial position/debt, seller’s assets, seller’s job status, seller’s hardship letter, number of seller dependants, seller and family’s medical conditions, amount owed on loan, who the lender is and if there are liens. We then provide the real estate agent a customized pricing strategy based upon our pricing formulas designed to achieve a quick sale within 4-6 weeks and help prevent the lender from requiring homeowners from paying large deficiencies. Each week or every other week your Real Estate Agent will submit the pricing changes to the MLS causing your property to be advertised to all the MLS viewers (hundreds to thousands) each week. This gives the property maximum exposure over a short period of time.

6.     What forms and or paperwork are required to complete a short sale?

ATR/Power of Attorney, 2 years tax returns, last 3 months bank statements, 4 most recent pay stubs, financial worksheet, hardship letter, contract, HUD-1, title search, listing agreement, comparables, listing history report, repair report and pictures of damage.

7.     Should I place a cancellation fee in my short sale properties I list?

This is your decision. However, some real estate agents have success with cancellation clauses preventing the homeowner from switching to a competitor after you have done all the work. In addition, it is a great closing tool telling the homeowner if you don’t sell the home in 3 months there would be no cancellation fee to pay. If you implement FRG’s pricing strategy, you should sell 80% of your listings in 4 weeks. If the home has a FHA backed loan then you will not be able to put a cancellation fee in the agreement. FRG anticipates other government backed programs endorsing lenders to complete short sales via incentives will prevent cancellation clauses in the agreements.

8.     How do I list a short sale on the MLS when I don’t know what commission the lender will approve?

Different MLS agencies allow different verbiages or strategies. Most MLS agencies are very understanding and easy to work with and so you should contact them to find out there preferred way. The best way is to submit you’re listing with your verbiage to get approved to your local MLS agency. If they don’t accept your verbiage ask them what verbiage can you use that will address the problem of not knowing what commission the lender is going to pay.

9.     Can FRG get an approved short sale price prior to receiving a contract?

Yes, in some situations with some lenders. Some lenders are beginning to focus more on short sales and realize it will be a large part of their business over the next three years. FRG is one of the first companies in the industry to get pre-approved pricing for short sales. FRG has developed strategies in filing consumer protection requests requiring lenders to at least have to respond to our requests for short sale approval status including submitting a valuation for them to approve. Not all lenders are doing this, however with the new government incentives FRG believes more lenders will embrace this process because it saves them time and money.

10. What do I need to do to have FRG request “short sale” pre-approval status including targeted home sale price?

You simply need to provide completed paperwork just like you do in a short sale and request FRG to make requests for pre-approval pricing. Even though you are awaiting pre-approval pricing you should still immediately start using FRG’s suggested pricing strategies. If the lender comes back with high BPO’s you will already have some data to provide to the lender that they will not get a sufficient buyer response with their suggested pricing. We will adjust the pricing to the lender anywhere from 5-10% below your current targeted pricing in the pricing strategies to accommodate anticipated market declines for 60 days if for some reason the house doesn’t sell in 6 weeks. Then if you sell the house above approved valuation, the short sale gets done quicker and leaves room for any additional problems like liens, taxes or HOA fees that increase or might possibly be procured.

11.  What is the average commission the lender pays in short sales to real estate agents?

6% when the buyer is submitting fair offers. Lowball offers generally are frowned upon and are counter offered including demanding commissions be reduced. Contracts within reasonable short sale pricing standards are generally accepted. Today, most government backed loans require the lender to pay at least 6% real estate commission. With the new government incentives of paying lenders fees including sharing the loss of a short sale, lenders are incentivized to get as many Deed in Lieu’s and short sales completed prior to these incentives end. Therefore, some lenders are beginning to pay 8% commissions in short sales to compete with the REO’s.

12. If I list and sell the property how much does the lender pay?

Some lenders have actually paid both sides full commission when a loss mitigator is used. However, as a general rule only expect around 4-5% for both sides when you list and sell both sides. Again, it really involves if the offer is fair.

13. What commission percentage should I put in my listing agreement?

8% . If the lender cuts the commissions a couple of points due to lower offers you receive from buyers, you had rather it be cut from 8% than from 6-7%. Some lenders like Wells Fargo has recently sent letters to some homeowners informing they will pay 8% commission to Real Estate Agents for an approved short sale if sold in 90 days or less. (To view a letter, request a copy from FRG). You may need 8% to compete with the soon to be flooded market of pre-foreclosure sales paying 6-8%.

14. How do I overcome incorporating 7-8% commission rate in my listing agreement when competing agents offer to sell the home at only 5-6% commission rates?

First, the best thing you could hope for is for an agent to offer to sell a short sale at a cheaper commission than you in a short sale. You can explain to your short sale prospect, the key to getting their home shown by other real estate agents is to pay them. The seller isn’t paying the commissions whether it is at 5% or at 8%. The lender pays the real estate commissions. Most real estate agents have not had good experiences with short sales due to many real estate agents not understanding the complexity of short sales and previously have rather shown non short sale properties. In order for your client to get the highest number of agents showing their property, you have to pay them. When real estate agents are faced with a non-short sale property having a 2.5% commission and a property having 4.00% commission that are similar and meet the needs of their customer, many agents will usually choose the property with the highest commission. In addition, short sales are competing with many REO’s that are paying 8% total commissions. Finally, after telling your client or prospect all of this you simply ask “do you really want someone representing you that does not understand short sales or do you want an expert who understands small details such as having the right commission structure in place to get your home exposed to higher numbers of potential buyers”.

15. Why should I have my client request an Earnest Money Deposit?

Because it is the single most important step in getting qualified buyers who will not walk. It will also keep investors who focus on equity stripping from wasting your time that put out many offers. A qualified buyer who really wants the home will put down an earnest money deposit to keep other potential buyers from buying the home. The second reason is it assures you and your client the contract will get the preferred attention lenders give. Many lenders focus on contracts with earnest money deposits first and foremost. Lenders have been burned so many times by investors who put contracts on three or four homes and then cancel the remaining contracts when they find another home they might want to purchase. With the upcoming volume of short sales that may double or triple, having an Earnest Money Deposit should be important. Earnest money deposits scream to the lender this is a legitimate deal that has an opportunity to close.

16. Why will most current sellers in financial trouble not qualify for loan modification programs such as Hope for Homeowners, Home Affordable Refinance and Home Affordable Loan Modification?

First you should always encourage your clients or prospects to determine if the programs make financial sense in their situation. If so, encourage them to seek qualification from their lender or FHA first. Because many of these programs also analyze the loan to value ratio, many lenders are not going to refinance loans where the owner is already upside down 50% on the value of the home especially if they have a high debt load. Some lenders will not even discuss options if the seller does not have a minimum of 10-20% equity. Over 90% of the homes in foreclosure in Florida do not have equity at today’s current market value. In addition, many of the homeowners in financial trouble have total debt to income ratios between 80-100% and it just won’t be feasible to get them to an acceptable debt to income value. Most of the homeowners who are already facing foreclosure have already borrowed money from their family and have maxed out their credit cards. Most are living paycheck to paycheck meaning 100% of their paychecks are being used for living expenses and bills. Considering short sales and foreclosures are such a drastic change in a family’s life we all have a moral duty to our friends, neighbors and citizens to help when we can. Therefore, it is wise and maybe a fiduciary duty of a real estate agent to first encourage homeowners to seek help from their lender to see if they may be able to qualify for the Government sponsored programs. While you may lose a listing or sale opportunity you will gain a long time friend. Homeowners you are able to help in situations when they are down on their luck end up referring more business to you than you can handle. In addition, you will be following the legislative intention of Federal and State laws recently enacted that want to give homeowners a chance to refinance or modify their loans prior to foreclosure and not be charged upfront fees they may lose if they don’t qualify.

17. Why are short sales the best opportunity to make money in Real Estate over the next few years?

Since so many homes are upside down and many homes are sometimes 40-60% below 2006 valuations, the number of short sales will continue to dominate the market. Also, the Federal Government is now incentivizing lenders with cash payments and sharing the loss on the loan to do short sales as opposed to lenders continuing the traditional foreclosure path. Another reason is currently today; approximately 85% of homes in pre-foreclosure actually complete the process of foreclosure and are auctioned on the courthouse steps according to an article published in Florida Today this year. With new legislation incentivizing lenders to avoid foreclosure by paying fees to lenders to complete short sales and Deed in Lieu, many lenders are expected to start marketing and promoting to their homeowners to find a local real estate agent who specializes in short sales to list their home on the MLS to sell as a short sale. Wells Fargo mailed out 30,000 letters to homeowners in April 2009 to discuss loan modification and or refinance options according to the April issue of Business Week. Homeowners who do not qualify will be informed about the short sale and Deed in Lieu options. In order to participate in the Government sponsored programs the homeowner is required to list their home with a real estate agent. Some lenders will also inform homeowners they may receive up to $1,500 or more cash at closing if the short sale is completed by certain dates. For example a recent HUD contract offered by Wells Fargo provides $750 cash at closing and then $1,000 cash if it closes before 7-9-09. In addition, FRG requested this client to be taken out of foreclosure and stop the auction that was scheduled in a few weeks from the date the request was made. Wells Fargo stopped the auction and provided written approval for the homeowners to try and sell the home via short sale for 90 days. Some lenders will be offering cash money to homeowners who cooperate and find a real estate agent and are successful in selling the home. The lenders will promote waiving deficiencies and providing up to $1,500 for relocation expenses or simply cash for successful sales. This will quickly create major rushes of homeowners to finding local real estate agents who specialize in short sales. This is why it is important you begin to promote yourself or agency as the local expert for short sales NOW! This is why it is important to start marketing to homeowners in foreclosure NOW! When they get the letter from their lender to find a real estate agent they are going to remember your name. In addition, with home values down and most homeowners upside down, the majority of other homeowners needing or waiting to sell but not in foreclosure (called the “waiters”) do not have incentive to move, buy a new house or build a new house at this time. As the market begins to pick up and home values begin to increase this group of homebuyers (waiters) will continue to bring home prices down by finally placing their homes on the market probably over the next year to three years as their funds begin to dwindle and or need their credit free from the mortgage. Another factor that will make short sales the bread and butter of real estate sales is the fact, a builder simply can’t compete with REO’s and short sales on price/square foot at this time and have virtually stopped building new homes to sell. Building permits are down as much as 80-90% in some areas of Florida since 2006. Just remember, all of these new programs and offerings will probably continue to enhance and change the programs.

18. Why have lenders been using Auction companies to sell REO’s?

Several reasons. Many auction company’s get homes sold in 30 days and put fast needed cash in lenders pockets. A misconception about auction sales is that auction companies sell homes at “fire sale” prices. The average auction sale today competes and in many situations actually are more profitable then traditional real estate sales. Auction companies can attract up to 8 thousand serious buyers in a weekend auction sale who put down $5,000 just to bid. Remember buyers pay a 5-10% premium fee to the auction company that is not an expense to the lender like the 5-8% commission that is paid by the lender for REO homes. Finally, auction companies attract serious buyers who put down $5,000 just to bid and already have databases of thousands of buyers making it an attractive alternative to lenders.

19. How will selling short sales help my traditional sales in the long run?

Short sales are going to dominate the real estate market over the next few years. The April issue of Business Week explained 40% of the home sales in March 2009 were foreclosure homes. Brokers and or agents who focus on short sales will become the top producing agents which will allow you to expand your business. Homeowners are smarter these days and prefer to work with proven sales people or Brokers who are overachievers. Being able to show your prospects you were one of the top agents or brokers in your local area will carry a lot of weight. Homeowners want sales people who will get these homes sold. Lenders are soon expected to be promoting to homeowners to seek out real estate agents who specialize in short sales. You and or your broker have the opportunity right now to become the person and or location homeowners will be seeking. Also, if you are selling the most homes for the next 2-3 years you are also creating a customer base who will probably sell again in 3-5 years when their home values will most likely double according to many economist and real estate financial experts. This customer base will also remember how much money you made them and will want to work with you again. So focusing on short sales now will be key to establishing long term business and unlimited referrals over the next 5-10 years. Over the next year, you will become the established leader in short sales or you will watch your competitors become the established leader. In order for Brokers and agents to survive over the next 3 years short sales will be a requirement of your business model.

20. How much longer are short sales expected to dominate the market?

Some Government officials and industry experts predict foreclosures to increase or remain at current levels thru 2009 and 2010. Harder hit areas like Florida are expected to continue to see market values decline until 2011 according to Chief economist of Moody’s Investor Service (Wallstreet Journal Feb. 6, 2009). If the economy continues downward and job losses are not stabilized the foreclosure chaos could continue into 2012 or longer. As previously mentioned, foreclosures will continue close to its current pace over the next 2-3 years due to job layoffs (unemployment). Then you will have another group of homebuyers (“waiters”) who tried to hang on to their home until values increased before they decide to sell. The “waiters” (see question #17) will eventually get caught in the money crunch and will no longer be able to hold out for property values to increase. It is predicted “Waiters” will continue to deflate home values and or prevent from rapid value increases for at least 1-3 years depending on when they run out of funds. There are so many opposing ideals, strategies and thoughts on the market evaluation that it is almost impossible to predict what the market will bring the next five years. Everyone has to take their own perceptions and beliefs and make their own determinations of the market. For example, much of the Democratic Party believes it will take 2-3 years for home values to turn around with the economy stimulus packages that have been implemented. However, news channels continue to report some Republican Parties and economists believe the economy stimulus packages passed are wrong and may cause the economy to go into an extended recession. This is not going to say who is right or who is wrong; it is just that different political parties and industry experts have different opinions that appear to change every time major financial press releases are released relating to good or bad financial news.

21. How do I market short sales?

Marketing short sales are easy because you know exactly who your target market is including name and address. The key is to have an integrated mail campaign with knocking on doors to get the best results. If properly executed and communicated correctly, a good real estate agent can close approximately 80% or more of face to face meetings with short sale prospects. You can try to create your own marketing programs that will take 6 months to a year to refine or you can utilize time proven strategies, marketing plans and programs from FRG allowing you to get started immediately. FRG has a marketing implementation and training program that ensures success. Part of this program includes getting leads in an excel format of homeowners who currently are in pre-foreclosure and or who have had a Lis Pendens filed. FRG also provides you examples of how to market on the MLS, in newspaper ads and sales sheets. FRG explains how to implement signage and where to list on the internet to get sales. FRG is also in the process of releasing a new FREE Home Loan Modification workbook providing homeowners an A-Z guide on what to do when attempting a loan modification. The free home loan modification workbook has all the same forms you would use so the client won’t have to fill out new paperwork if they are turned down by the lender. Remember, the hardest hit areas of the country like Florida will be difficult for homeowners to get approved thru these Government sponsored refinance and loan modification programs due to not having equity. The book explains the process of loan modification and refinance including the difficulties they will face and some strategies to overcome the difficulties. Most homeowners that read the home loan modification guide will realize they probably don’t qualify and will begin to analyze there options. The loan modification book will educate them that short sales are probably going to be the best approach but provides them with all their options including encouragement to contact their lender and FHA for free advice. Since many of these homeowners will become frustrated with the loan modification process they might seek different companies who might be providing loan modification services to perform this service for them. The workbook discusses the various foreclosure scams to stay away from so they don’t fall victim to predatory foreclosure scams. The workbook also educates a homeowner why real estate agents specializing in pre-foreclosures are the best to hire if it is determine they need or qualify for a short sale.

22. What is the average length of time it takes to get an approval letter from the lender?

Usually 30-45 days. However, Countrywide Home Loans is taking 90 or more days to process. New laws and legislation could change the current time periods FRG currently experiences.

23. Why is it better to have FRG complete my short sales than for me or my brokerage firm to do them ourselves?

In 70-80% of the time the lender is going to pay for FRG’s services. Processing and managing short sales is a full time job. An average short sale without 2^nd liens, HOA Liens, Tax Liens, PMI Insurance, and HELOCs will take approximately 23 hours to complete the right way with someone who is an expert and not learning something new. If it does have 2^nd liens, HOA liens, Tax liens, and HELOC’s it could take an additional 10-20 hours. Many real estate agents who do their own short sales average 4-5 months to get approvals and have the buyers walk in over half their deals. FRG gets most deals completed in 30-45 days and when they are completed in 30 days or less only 1 out of 20 buyers walk. FRG has 5 years of experience with management and or supervisor contacts (that are very hard to get) within many lender’s loss mitigation departments when we are having problems that need escalating. This allows you to focus on sales. Also, lenders are not going to pay Real Estate Agent fees to negotiate short sales probably due to potential legal problems relating to conflict of interest problems and fiduciary issues that could be raised and could make a contract subject to rescission under the Truth and Lending Act.

24. Why could it be considered a conflict of interest if I (real estate agent) negotiated the short sale myself?

In short sales, many times the negotiator is negotiating bottom line acceptance amounts and counter offers from lenders and additional lien holders. Sometimes the lender/lien holders give options to either request the buyer or seller to pay more towards the price or closing costs and or request real estate commissions to be reduced. Real Estate Agents having to make these decisions simply would be violating fiduciary responsibility and conflict of interest laws. Sometimes the negotiator is faced with having to request either the seller and or buyer to come up with more money and or for the seller to sign agreements to pay deficiency amounts or in the alternative request real estate agents to reduce commissions. Consumer Protection Laws for consumers in financial dire straights will always be in favor of the consumer and it would be easily interpreted as taking advantage when you are having to make decisions on who is to get paid especially when your commission is part of the negotiation. Since the seller is already vulnerable financially, real estate agents negotiating their own short sales may or could find themselves in very bad legal positions with clients that felt they were taken advantage of when they are required to sign deficiency notes. In addition, it is not uncommon for the negotiator to be faced with the decision of whom to request more money from (buyer or seller) by lenders or lien holders. In this situation, you are vulnerable to conflict of interest issues from both parties. Having an arbitrator /negotiator in the middle weighing these decisions so that everyone wins provides an extra layer of legal protection. Since a arbitrator/negotiator like FRG will be paid the same fee structure whether the lenders or buyers/sellers agents pay, provides a more true non-conflict situation.

25. Does it have to be disclosed by law who is negotiating the short sale?

Yes. It appears RESPA/TILA requires any company or person completing work on a real estate transaction and getting reimbursed to disclose your affiliation and what services you may be performing. Therefore, it is important you provide your clients (sellers) and buyer’s agent the proper disclosure forms that explain FRG’s services. If you are trying to negotiate your own short sales and considering real estate agents are defined by law as a agent having fiduciary responsibility, you should disclose in writing that you may be faced by the lenders or lien holders of either having to reduce your commission or that the lender may request your client to sign a note for a deficiency balance. Then when this happens you will at least have provided notice to your client. This probably wouldn’t stop a law suit for a homeowner who feels he/she was taken advantage of but it probably would at least remove intent and negligence of fraud. It is well established in law, contracts signed under duress and where a conflict of interest lies may be an illegal contact and potentially could be reversed. If you are trying to negotiate your own short sales you should contact a lawyer who specializes in consumer protection laws including RESPA, TILA and FDCPA to give you proper advice.

26. I work for a large broker who has their own inside attorney who is negotiating our agent’s short sales… is this a conflict of interest?

Based upon consumer protection laws, fiduciary responsibilities and most state’s code of ethics laws defined for attorneys by the legal system; it probably could be argued your attorney could be violating laws. This could possibly make your short sales susceptible to future rescission opportunities and or legal problems. First, most attorneys, would agree it would not be wise to represent a seller, buyer and broker in a transaction where the broker pays the attorney’s salary. Any company and or person who is working on and on completing short sales will be placed in a position where either a lender and or secondary lien holder will give an option to request the seller to sign a note for the deficiency balance or require the seller and or buyer to pay more towards the closing costs or give the option of reducing real estate commissions. Not many attorneys would represent these competing interests especially when the attorney is paid by one of the competing interests. Your attorney should pose these scenarios to attorneys who specialize in consumer protection rights and or pose these scenarios to their state Bar Association. This doesn’t mean your attorney has done anything wrong nor does it mean your attorney acted in bad faith. Short sales is relatively a new market focus and most attorneys just didn’t realize what a short sale involved and didn’t realize they would end up representing competing financial interests. In addition, if your attorney has completed more than 25 short sales the attorney probably has already realized it is simply to cost prohibitive for him/her to do when it could be farmed out to an outside firm that would be less expensive to the company.

27. Why have lenders changed their strategies of selling REO’s and pre-foreclosures?

Prior to 2007, most homeowners either had equity or at least their assets equaled their debt obligation. Prior to 2007 a lender could sit on the home for a year and the value of the home would increase in value enough to almost cover its carrying costs. Today lenders are holding properties where the value of the home is upside down sometimes as much as 50% creating heavy losses that are depleting cash reserves and value to lenders. Many lenders need cash to survive the current foreclosure crisis. Previously, lenders would like to see the home on the market for several months because it could afford to take this strategy due to a market that increased values of homes. Today home valuations are dropping and lenders are seeking quick sales to infuse cash and stop the monetary bleeding.

28. Can I still sell a short sale of a client who is in bankruptcy?

Yes, if the Judge allows it to take place. However it is not recommended that Real Estate Agents negotiate short sales in a bankruptcy case without having a third party negotiator due to conflict of interest issues and adversary proceedings that could be brought by 2^nd and 3^rd lien holders against you. Attorneys representing bankruptcy adversary litigants already have experience in fighting for their clients using conflict of interest issue strategies that could tie you and your broker up in court for many months. However, Bankruptcy short sales will most likely become a new opportunity to sell homes with the new legislation being proposed where Judges will be able to strip liens and establish new market values for homes in order to avoid costly foreclosures. This area is very tricky and you could end up having your commission fees fall under bankruptcy, so you need to work with a third party company who understands what needs to be filed in court relating to the short sale process to protect your interests including the proper letters and documentation you need to send your clients when they file bankruptcy. FRG already works with bankruptcy attorneys who have clients who want to complete short sales.

29. How does FRG stop the foreclosure process in many deals?

FRG’s 5 years experience including dealing with the legal process of pre-foreclosures, foreclosures and court auctions has allowed FRG to experience or witness many cases. With this experience combined with new strategies helped FRG find ways to work with lenders to stop most foreclosures temporarily until short sales are complete. There are numerous consumer protection laws on State (each states laws varies) and Federal levels your clients can implement to slow down and or stop foreclosures temporarily. FRG management has extensive experience in the Court system process including management who worked in the Seminole County Court System for almost 5 years. With proper types of consumer protection requests, some lenders have agreed to stop the foreclosure process including setting aside auction dates to allow our clients 90 days to complete an approved short sale. FRG has even helped clients reverse auction sales, submitting a contract a week after the home had already been sold at a court auction sale by working with the lender, lender’s attorney and seller. The key is simply providing win-win situations for the lender, seller and buyer. However don’t let any of your clients get any idea that the strategies that FRG uses are in any way the same strategies or stop foreclosure programs many of the real estate investors use and or foreclosure scams that we have all seen where the seller and or lender are stripped of equity. (See FRG’s Beware of Scams Overview).

30. Can homeowners still sell their home after the home has been foreclosed and sold at auction?

Yes, in some situations depending upon the Judge’s permission! FRG has programs to help your clients in this situation but there is only a window of opportunity. In addition, several things need to be filed with the lender, court (by the seller) and REO departments. However, FRG does not recommend this approach and prefers to contact the lender prior to auction to procure a 60-90 day opportunity to complete a short sale. If you are an individual homeowner or a negotiator who does not have experience with this, you should seek an attorney before trying this.

31. How does FRG usually get real estate agents higher commissions and helps prevent lenders from lowering commissions?

Simply, we cost justify to the lender that selling this pre-foreclosure home instead of waiting until it becomes an REO property saves them thousands of dollars in carrying costs. First, lenders like working with loss mitigation agents that get deals done quickly. Lenders like having completed packages and like having their return on investment spreadsheets already completed. This saves lenders time and money. Each additional month it takes to process short sales could cost the lender on average of $4,000-$5,000 a month in carrying costs which is hard savings to the lender. This is one of the reasons some lenders are willing to pay higher commissions. Another reason is that it is easier for FRG to claim how much work and effort real estate agents put into the deal deserving a higher commission than for the real estate agents to ask.

32. How is Chinese drywall going to effect residential sales?

Chinese drywall will soon be every real estate agent’s (in the states that are affected) nightmare unless the Federal or State Government steps in and either passes legislation or agrees to cover the costs. Chinese drywall was used in thousands of homes (some estimates as high as 35,000) in Florida between 2004-2007. A majority of the Chinese Drywall was the result of Hurricane Katrina. Hurricane Katrina caused traditional drywall supplies to be depleted due to the building efforts in the Gulf Coast like Louisiana, Texas, Alabama, Mississippi and Florida. Chinese drywall is purported to emit corrosive gas that damages household electrical systems and causes respiratory illness. It has caused some homeowners to have to replace air conditioning systems in particular air conditioning evaporator coils in less than two years. Symptoms of irritated eyes, respiratory problems, nose bleeds, coughing, sneezing and headaches have been made. Pipes and wiring may also be deteriorating. Knouf Plasterboard Tianjn Co. LTD of China (A German subsidiary) is so far mentioned as the main manufacture who supplied much of the drywall to Florida. FRG can help guide you with the steps you will need to take and possibly help prevent this situation from affecting your short sales and or really any sales having this Chinese drywall issue. Just remember until Chinese Drywall is resolved politically thru legislation every client having Chinese Drywall could be a different approach to a resolution with some home sales probably not reaching resolutions at this time. Currently only some builders have agreed to pay for the replacement costs. Most builders are not paying. FRG is one of the first companies in the country to negotiate short sales homes infected with Chinese Drywall. In fact, FRG consults with lenders on how to properly value and process short sales having Chinese Drywall.

33. Will lenders accept more than one offer for a short sale?

Most lenders today will not even accept a proposed offer unless it is an executed contract.  There are a few lenders like Chase who still recently allowed multiple offers but that is quickly changing.  In most cases, when someone is not willing to sign a contract it usually means they are putting out several offers on homes waiting to see which one will come back and be the best offer to take.  Also, someone not wanting to get locked into a contract also usually means it is an investor that has multiple offers out there.  This means you could end up spending a lot of work on the deal and find that they didn’t like the numbers. 

34. What should I do if the lender comes out and places new locks on the seller’s door? Can I still do a short sale?

Don’t worry this is a common procedure for lenders when the home is vacated by the sellers. This action is taken in order to prevent “squatting”, damage to property and removal of items that can be pawned like piping etc. Even though this action could be considered illegal because the title of the property is still in the hands of the seller, it is necessary to prevent more losses that the seller could be responsible for via a deficiency claim. FRG contacts the lender and coordinates to get a copy of the keys for the listing agent to use in order to facilitate a short sale which is usually delivered within a week.

35. How is PMI (Private Mortgage Insurance) beginning to effect short sales?

Some PMI companies are taking heavy losses and are working with banks to get the seller to sign deficiency amounts. FRG has already negotiated successfully some of these sales. This type of negotiating requires very high levels of knowledge and experience to gain a fair approval preventing the seller from paying absurd deficiency amounts that some PMI companies are requesting. This requires a completely different approach then the traditional negotiation techniques used with the lenders and second lien holders necessitating different communications completed and submitted with the short sale contract.

36. How important is having pictures to demonstrate your repair/damage issues of the home?

Usually in 95% or more of the pre-foreclosure homes we find there is some type of damage or something that needs repaired. Usually walls/rooms need to be repaired; carpet may need to be replaced due to stains and animals. Stoves, ovens, microwaves, dishwashers and refrigerators are sometimes missing. Other times it could be water stains on the floor or ceiling especially if a new roof had been recently put on the house, usually because of a leak. Most often people move out in a foreclosure situation they simply quit caring about the home. So you will see more holes in the wall or more scuffs due to moving. Kitchen cabinets are sometimes missing including kitchen drawers. We have also seen doors including closet doors missing. Many times plumbing/pipes are also taken and sold. Lenders know there are damages with pre-foreclosure and REO’s so they expect it. They realize if the homeowner didn’t have the money to pay then they probably didn’t have the money to make repairs to the house or fix it up before it sells. If your property gets a bad BPO or appraisal on the home, many times the repair report will help FRG bridge the gap of difference in value instead of the sale being completely denied and having to start over and submit everything again later with the repair report and pictures. Generally having the damage report and pictures completed up front can sometimes save you 1-3 months of time on getting your short sale approved.

37. How do I get started?

It is easy. Just call 1.877.221.0459 or send an email to Info@FinancialRecoveryGroupLLC.com requesting your agent start up and implementation package.

DISCLAIMER: Some of the information provided here is for educational purposes only and is derived from industry experts, informational news and websites. You should consult with your Attorney, CPA, Financial Advisor and or Real Estate Agent for any questions you may have that are legal and or financial in nature.