Will Your Short Sale Option Work? Will Your Deal Close?
On Monday, August 25, 2008 Jeff Watson of SREC and Marc Karyo of Old School Title spent a great deal of time talking about the option contract. When the authors of the option contract method for short sales talk, people should listen. The point of the conversation was how the option contract method should read and should not read as it relates to putting the respective parties on notice of what the investor is doing in the transaction.
The whole idea behind the option contract method is open and transparent disclosure; however, because of new underwriting guideline concerns by the major title insurance underwriters, specific language has to be in the option contract to satisfy these concerns.
Marc Karyo is facing numerous challenges with so many copied versions and altered versions of the contract being submitted to his company for closing. Unfortunately, many of these new versions of the option contract were not prepared by attorneys nor did their creators work with title insurance companies on drafting an option contract that will work for a short sale transaction.
The bottom-line is this: unless the option contract includes specific language that puts all parties to the transaction on notice about what the investor is contemplating, then many title insurance underwriters will not insure the deal.
All too often investors who are trying to save a buck by not using a lawyer or by not acquiring good quality documents find themselves in a position where they have got a deal put together but they can’t close it because they are not using the right paperwork in the right way. Sometimes it’s penny wise and pound foolish.
What should an investor do?
The rest of this post is an ad to buy his product...and deleted.
John (LV)
TCI Moderator
[ Edited by jfmlv1950 on Date 08/26/2008 ]
Read his signature page:
"As the Director of Curriculum and Instruction for SREC, I came to real estate investing from academia and hold two masters degrees. I migrated from a traditional real estate paradigm to a short sale business model.
This background information sounds like a good beginning for a Nigerian e-mail.
ted cowan, SREC Coach "No Advertisements Please" I guess you are not allowed to send an advertisement to him, but he thought he could advertise against the Forum Rules.
John $Cash$ Locke
[addsig]
John, i see you are moving closer towards Charlotte. Are you the one soaking up all the good deals?
CharlotteInvestor,
Actually I have been in the Charlotte area for about 2 1/2 years.
When we saw the pending mortgage problems coming
we moved to the Charlotte area after we did our Demographic Marketing Research to find some areas in the U.S.less likely to be affected.
The results showed us that this area would remain stable, which it has compared to many places.
John $Cash$ Locke
[addsig]
I have the same question as cjmazur - I usually handle my own short sales but recently I was approached by a company that offered an option on one of my listings. Afetr reading through the option and all the other paperwork - I too wondered why a lender would short sale for an option.
Ted,
My other recommendations would be to contact someone, who is nationally known, has articles written about him in many major publications, because of his knowledge about Short Sales.
He has around 3900 posts on this board helping investors, has never been pulled up for Board Hustling.
Now if you really want to know about Short Sales and how they are done then check this link out.
http://www.thecreativeinvestor.com/User-TheShortSalePro.html
John $Cash$ Locke
[addsig]
Ted,
One additional way is to put your documents and info right up here on the board for all to see and download as they wish for free.
Just contact Joel for details.
John (LV)
[ Edited by jfmlv1950 on Date 08/28/2008 ]
I change my tune..
I watched one of the videos, and other than leaving out some key details, I that it was pretty interesting.
Since I am not privy to what the bank sends the sellers I am unaware if they have already sent the written payoff letter. I would think that the sellers agreed to what the bank proposed because they signed my contract on the house. The contract was provided directly to the bank who in turn had the seller sign it. [ Edited by needinfo on Date 09/01/2008 ]
The contract is only between you and the seller, not the bank and you. As stated above you are more interested in getting a payoff letter. THe bank will fax you a payoff saying exactly what they want to NET. at that point you need to find and attorney and/or title company and set up a closing. Dont get all caught up on the contract. The point of the contract is to get where you are with a payoff acceptance letter.
-Ryan
I appreciate all of the input but the question I have is: What is the sequence of divisions within the loss mitigation department that a contract needs to go through before I can go to settlement? What conditions have likely been met when a contract is transferred to the "closing department?"
jackbenimble,
The $14.95 is the front end, here is the up sell and back end of the deal with these folks.
"We’ve also started a NEW coaching program called the “Short Sale Success University.” It’s $10,000 per year. ."
Now you can just buy the course for around $995.00 or there a bouts.
Ole Ted was just trying to help of course by wanting to post a site where you can download some free forms, or are they $14.95 like he posted until he was pulled up for Board Hustling and then I guess they went to Free.
John $Cash$ Locke
[addsig]
STOP ADVERTISING YOUR PRODUCT HERE!
John (LV)
TCI Moderator[ Edited by jfmlv1950 on Date 09/04/2008 ]
And the short sale blue print is $999 right?