Do the homeowners still owe the bank money after a real estate foreclosure? That is up to the bank.  When you negotiate a successful short sale, keep in mind that the agreed upon price is payment in full so the title is clear for you to close.

However, the homeowners may still owe the difference between the mortgage balance and the discounted amount.  This is called a "deficiency judgment."  If granted by the court, this judgment will affect the homeowners and their credit report just as any other judgment.

You can ask the bank to accept "payment in full without pursuit of any deficiency judgment." But the bank does not have to grant your request.  Most of the time the banks will not pursue the deficiency judgment, they will just 1099 the homeowner. You need to explain to the homeowners that the discounted amount (the difference between the mortgage balance and the short sale) may be declared as income on their income tax return by means of a "1099."

Since the homeowners have been under such financial duress they probably haven't made much income, a 1099 may not adversely affect them. The homeowners can contact a local tax advisor for more details.  Make sure you provide information to the homeowners (Preferably in form of disclosures for you or your company) but do not give any legal or tax advice.

What is a 1099?

1099 forms are used for a number of reasons, though, typically, they are given to independent contractors--also known as "freelancers"--as a record of the income they received from a particular business.  So in essences the 1099 are reported as income you received from the bank.  You must explain this to your homeowners when discussing a short sale and advise them to speak with an accountant as to how a 1099 will affect them.

Typically, the homeowners are showing no income or have had limited income for quite some time because of the financial hardship they are facing. If this is the case, a 1099 will not affect them.

When we explain the results of the foreclosure sale and the 1099 to the homeowners, they never seem to care. They just want us to stop the foreclosure.

Deficiency judgment

Deficiency judgment is a judgment against a borrower in favor of the lender in an amount equal to the difference between the funds received from a court sale or short sale of a property and the balance remaining on a mortgage or other loan. The bank can seek a deficiency judgment for the shortage on the actual amount received versus the amount that was due.

Likewise, the same judgment can be sought when the property sells at the courthouse for less than what is owed or after the REO department sells the property for less than the full amount.

If the bank does pursue a deficiency judgment, the homeowners may have to file bankruptcy at a later date to remove the judgment. Another option is to short sale the judgment amount at a later date.

It's important for you to know that the lender cannot pursue a deficiency judgment and issue a 1099. They can only do one or the other, not both. If the deficiency is waived as a condition to the short sale, the homeowners will receive a 1099.

If the judgment is not waived, we leave the decision up to the homeowners as to whether to pursue the short sale or not.

It is important to remember as stated earlier, if there is no equity and the property goes to the sheriff's sale, and the bank receives less than what was owed, the bank can still pursue the judgment or issue the 1099.

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

You've probably figured out at this point that you can make a lot of money in a relatively short amount of time by adding short sales to your real estate investing arsenal, and if you haven't started testing the waters already, you're probably raring to go at this point. But remember, any time you can make easy money, it's probably also true that you can easily lose it! Now, you're not a person who likes to lose money, and neither am I, and it's extremely simple to avoid the downside of easy money in this case by remembering one final common short sale mistake: not getting control of the deed.

I've talked a lot about the mindset that a distressed homeowner is probably experiencing at the time of a short sale: distress! And what do high levels of tension and anxiety cause many people to do? Change their minds! You are about to invest a pretty significant chunk of time and effort into a deal that is worth every second and drop of sweat - remember, we put about $28,000 in our pockets in just over a week not too long ago - but you want to be assured that your investment is going to pay off. And if you don't have control of that deed, your homeowner can freak at any time and take it back. They're looking for an out at this point, and if someone else comes along with what sounds like a better deal - not all investors are scrupulous, and some will lie to get their hands on a good deal - they may back out of the negotiations or even replace you with someone else!

Once you've decided to undertake negotiations for a short sale with a lender, the first thing you need to do is get that property under a contract that puts you in control of the deed to the land. Most lenders won't want to waste their time with you if you can't vouch for the security of the negotiations anyway, so it will make your case that much stronger if you can say you are either the owner of the deed or at the very least representing the buyer.

This is one example of how important your relationship with the homeowner is, because many will balk - at least initially - at this vital step. Show them why it's important, and explain the entire process in detail - maybe even show them the checklists that we discussed in the last article so that they can see it's all part of a plan to get them out of debt. And before you agree to let them keep the deed without a contract, imagine how you'll feel when $10,000, $20,000 or even $30,000 walks out the door and into some other investor's portfolio because you didn't protect yourself. So cover your bases - and your assets! - before you invest your valuable time and money in any endeavor.

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

You probably have - or used to have - a co-worker like Jonathan. He's not really that remarkable. Maybe he spent a couple of years in college, maybe he dropped out before he finished. He's average looking, kind of quiet and doesn't really stand out in a crowd. In fact, you're fairly certain that you're much more knowledgeable than him about your mutual interests and business, and yet, the other day, you and he were talking about your common interests in real estate investing, and it turns out that he's been involved in it for 6 months and has done as much as you did in the past year!

So what gives? Maybe he's an investing whiz, but maybe, he's just doing something you're not. And that something may very well have to do with the way he's thinking about himself, his investments, and his future. It's possible that your outlook on yourself may be holding you back, so consider implementing these positive thinking strategies in all areas of your life - especially your investing portfolio - and get ready to take off!

1. Positive Thinking Is Contagious. If you're positive about your abilities, other people will be too. And the more faith you have in yourself, the more you'll be inspired to fulfill your obligations and take your business and your life to the next level. And as your outlook improves, so will the mindsets of the people around you - so you'll all be supporting each other in individual and group growth!

2. Always use positive words in your inner dialogue. If you constantly reaffirm to yourself that you Will succeed, you're less likely to succumb to feelings of inadequacy that can lead to giving up and letting things slide.

3. Visualize several successive successful outcomes. If your goal is to make a million dollars, that's great. And you need to visualize that outcome With It's Implications constantly.

Not only will this motivate you and maintain your faith, but it will prevent you from stalling upon the attainment of your goal. What will you do with that million? Will that be enough for you to do it once? Don't just think about how to spend it, but imagine how you'll make a (surprise, surprise) POSITIVE impact on your life and the lives of your loved ones with future goals.
The simplest positive steps can drastically alter your life upon implementation. So take control of the things closest to you - your mind and your heart - in order to seize the success you deserve.

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

Dear Student
I've had the privilege to teach short sales to over 20,000 people in the last 8 years. During that time I personally managed to purchase more than 350 houses from people facing foreclosure. And our team continues to do so every day. This real life momentum has spawned thousands of successful students, and dozens of new short sale experts, who now teach the business while running their own powerful house buying businesses. I'm darn proud of this legacy.

The techniques and strategies you'll find embedded in our seminars and information products on this site were at one time proprietary to only my staff and a few key students. Over the years, we've created and innovated these techniques ourselves. When I first started teaching, no one ever knew what the heck a short sale was. Through our now much expanded network, and open sharing in countless hours of private one on one group masterminds, even visiting large bank mitigation centers across the country, we believe we have assembled the most accurate and practical short sale information available.

Our personal deals and my short sale advisory board, including our on-staff loss mitigators continue to innovate and refine these strategies everyday. And it's my goal to make YOU an expert in this field. Once you take this opportunity and run with it I'll take you places you've never even dreamed of.

STARTLING GOOD NEWS REVEALED!

Amidst today's subprime and prime lender mortgage meltdown, short sales have hit the mainstream. Everybody now knows that short sales are the ONLY way to go in today's market. Interestingly and oddly enough, there are VERY FEW real educated short sale experts. Meaning it's highly likely there is no competition in your area. A short sale professional is someone who uses this concept in real estate as their primary source of income. They don't complain about how tough short sales are, because they understand the parameters, which quickly weds out the time wasters in their deal pipeline. Most investors don't. So they continually bumble about, befuddled and bewildered, thinking short sales are just too time consuming. That's an easy and uncomplicated way to quit.

It's my humble opinion that if you fail to truly learn and utilize short sale investment strategies in your real estate career, you will easily never realize 80% of your income potential. Ask me how I know this... I could name a hundred students in every state who focus exclusively on short sales and preforeclosures as their sole means of income. What's the difference between them and you?

THEY HAVE GAINED OUR KNOWLEDGE, AND NOW IT'S YOUR TURN.

What are you waiting for? I know, you need to make sure this is real. It IS real to those who don't make excuses. I've seen some remarkable lifestyle transformations in so many students - transformations in the mental, spiritual and of course financial states. We celebrated many of these success stories a couple of years ago, when 1 personally flew Donald Trump as our Keynote Speaker, and gave away my $70,000 Hummer to my highest achieving student of the year. So what does this mean to you? Bottom line -- I want you to prosper and continually benefit from the information we provide. And you should stay plugged in to get continual feedback and support through our online membership community. This time tested information will take you to whatever level you want to go, at whatever pace you want.

WHAT'S NEXT FOR YOU?

Many serious investors (and those seriously disgusted with their J.O.B.) jump in and truly commit, by signing up for our five day intensive "Short Sales Exposed" training. If that's your choice, then CONGRATULATIONS! Others will start slowly, by checking our some of our free stuff. My advice is to get started on something, create momentum and make a decision. Get your confidence from those who have already made the journey. Read their letters and listen to their amazing backgrounds - all varied walks of life.

At a minimum, it's recommended you join our monthly membership, which is packed with an onslaught of seriously fabulous online training info, live calls with my negotiators working deals. Seminar excerpts, how-to videos and teleseminars. I extend a personal invitation to one of our national foreclosure workshops. Remember, those who don't understand how to invest in using short sales in today's market are getting left behind. Get yourself into explosive action in 2008, and we'll see you at the top!

To your quantum leap!
Jeff Kaller


P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

Negotiating Short Sales is a great way to supplement your income, or even replace your full-time job with a more lucrative and less time-consuming alternative. But the unlimited potential income is just one of many reasons that you're going to love doing short sales. Here are some other reasons that you may not yet have considered:

1. The "Win-Win-Win" Situation.
When you work with a lender to find an acceptable compromise on a price for a distressed property, you not only are obtaining a great investment property for yourself, you're also helping a distressed homeowner move on with their life without the burden of a foreclosure on their credit and their mind and helping a lender recoup money that they otherwise might have had to wait months or even years to recover - if they ever recovered it at all! Of course, the investment property for you is the driving motivation here, but the other aspects aren't so bad either. The other two parties may not thank you every time (if ever), but you are helping them both make the best of a bad situation, and you should feel better about that the more deals you do.

2. You're Solving Other People's Problems.
And what's more, you're doing it quickly, efficiently and effectively! Obviously, if a person has just agreed to a short sale, their mortgage is not their only problem, but once that particular problem is resolved, their stress-load is ten's of thousands - if not hundreds of thousands - of dollars lighter. And that relief can spur them into the next stage of their life where they'll be able to clean up their messes and start over fresh - and all this without the taint of a foreclosure on their credit.

3. Reliable, Predictable and Repetitious Results.
Once you've mastered the art of short sale dealing, you have a permanent source of income in your repertoire. Short sale deals require you to take a certain number of specific steps, factor in certain and specific aspects of a property, then produce and acceptable offer and walk away with your new investment. Not all your offers will be accepted, and you'll probably turn down some tempting deals because they're just too risky, but once you know how to spot a good deal and negotiate successfully for it, your potential is limitless! Because there will always be foreclosures (it's likely that the number will only increase as more and more people take out variable interest loans with rates they won't always be able to afford) and lenders will always want to recover cold, hard cash.

4. Feeling Good.
I've already discussed how you're helping other people while profiting yourself, but the other thing that's going to make you feel good is your personal satisfaction in a job attempted and completed well. When you close your first deal, you're going to feel like you won a marathon, and when you close your twentieth, you're going to feel even better! Investing in short sales may be a totally new area of endeavor for you, or it may just be a new facet of your real estate investing portfolio, but either way, mastering a new skill and making lots of money at it is incredibly rewarding. And the looks of admiration and even envy on your friends and family's faces when you break the news that you just doubled your annual income with one or two short sales will be - literally - priceless.

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

During my flight back from Fort Lauderdale, after my last lecture on Foreclosures for 2008, I was asked "Are you doing anything exciting for Christmas?"  What constitutes exciting?  If finances aren't a consideration, you can pretty much travel to any destination, not worry about what you're spending or suffering the consequences of being away from your business.

My wife Sofia and our daughter Allie and I have had some amazing trips in the last several years.  Our Preforeclosure business has always been good to us.  On December 21st, we'll have a closing that should net us just under $150,000...not a bad Christmas present to ourselves. 

So lemme see... are we doing anything exciting?  We are actually staying home in St. Augustine, Florida, taking early morning walks on the beach while make plans and stretching our imaginations.  Sofia's working on a couple of projects with our staff to make things run smoother.  I'll meet with my advisory board - nine of my students who've been with me for over 5 years - as we iron out the details on a major project next year...  and I'll be working with Jared in my office on a significant web product for early 2008.

Does this sound exciting?  Beauty is in the eye of the beholder... business to me IS exciting.  The line between work and play does become thoroughly blurred for any true entrepreneur.  The blunt truth:  for some entrepreneurs their business life is more important than a personal and social life, creating utter annoyance and tension for those around them. 

From the outside looking in, it's easy for others to label any determined, passionate entrepreneur as a diseased neurotic workaholic.  Endlessly neglecting non-work responsibilities.  Not spending enough interesting time with loved ones.

Interestingly, in my travels through Fort Lauderdale, I watched two different couples as we shuttled through the airport, as they got closer to their "exciting" vacation destinations.  I saw several underlying "themes" if you will.  One lady was making promises to a bill collector on her cell phone.  The other couple was engaged in an argument about how much the other was allowed to spend once they arrived at their resort in Lucaya.

So the problem we entrepreneurs face seems to be the biggest secret to ALL - entrepreneurial success.  Constant passion, the thrill of the ride, and being emotionally independent from a J.O.B. allow us to crate money on demand.  Don't get me wrong... I love to fritter away time, guzzle up my favorite cabernet while watching lifestyle moves... taking my daughter to Juicy Couture, or playing a good long game of Monopoly during the holidays.  And I do it all by conscious choice.

An exciting Christmas is a precise decision to be as productive or unproductive as you want. 

Here's wishing you an exciting and rewarding Christmas!!

 

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

Usually on Saturday's when I'm not traveling, I have to wake up at 6:00 a.m. to catch one of my favorite shows - High Net Worth. This show profiles entrepreneurs, and how they make their fortunes, and of course what they spend their money on. Mostly all of the entrepreneurs have made their money in real estate, whether it was luxury 100 room boutique hotels, time shares, you name it... One Billionaire, who owns three of the larges time share companies, is building a 90,000 square foot house with 20 kitchens and 30 bathrooms. Another is launching a prototype hotel in space... the idiosyncrasies befuddle me to no end. Like the guy building the largest house in America, yet still drives one of the first cars I used to own - a $12,000 used Lincoln Town Car. Why do they do what they do?

Because they can.

A buddy of mine, who's also a hard money lender and developer, just located a $50,000,000 (yes, million) pool of defaulted notes, then quick turned the mortgages to an investor for a cool couple of points.

Goldman Sachs mortgage department cashed in $2 Billion on the subprime fiasco . The three men responsible for the trade are expected to be paid between $5 and $15 million.

My students are regularly closing consecutive short sales deals...which piece of the mortgage meltdown will you participate in?

On the other side, there's a gajillion people losing their homes, countless others hanging on by the skin of their teeth. What's the difference between both sides? Well, I can tell ya, what's being said by one group versus the other. One side is complaining and whining and proclaiming the unfairness of the situation, all the while doing nothing to improve it.

Maybe they feel unqualified to be on the receiving end. A "stucked-ness" that just keeps them from becoming a successful entrepreneur. Hey, I get it. It's hard to remember your objective of draining the swamp when you're up to your elbows in alligators. I'm just about as unqualified as anybody when it comes to having the "stuff" our society requires to make money.

My parents were missionaries in Brazil, and I knew nothing about the United States until moving here at age seven (and no, I'm not a native Brazilian, my parents are from Tennessee). I never fit in at any schools, and historically made terrible grades - got kicked out of not one, but two colleges. And still, to this day, I am continually reminded that seven years ago, when people saw me launching my woeful speaking career I was undoubtedly the worst speaker they had ever seen.

I can't spell worth a flip, don't know jack about computers, yet in the last 8 years managed to be responsible for the sale of just under $20 million in sales of products and profits relating to real estate, which over my career has launched more than a dozen successful students who now teach short sales, virally spreading my short sale techniques all over the country. Even permanently and continually changing how short sales are done in this country... collectively negotiating over $1 Billion dollars in debt... yet I have no formal training in finance...or for that matter, the field I'm in!

It's important that you understand one thing: the result of your success will be that of decision, not qualification. Get yourself in the game in 2008...the mortgage meltdown undoubtedly will have you standing on one side of the of the line in the sand

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

Trying to find a great deal in real estate, even if the market is attractive and competitive it only means bargains do exist. In comparison to most financial portfolios where there's simply too much risk, real estate is still the most attractive path.

Fundamentally the sure way to find a great real estate deal is to identify a motivated seller in the right market.  No doubt a preforeclosure purchase can be a great way to save money on buying a home or investing in real estate.  

There are numerous seminars and how-to books that promise to turn even the most raw naïve buyer into a high-powered real-estate investor through the magic of preforeclosed homes. The problem is that instant, no risk, no-strings attached wealth often turns out to be like most things that sound too good to be true...not true! If it were easy money, everyone would be getting rich off of preforeclosures.

Word to the wise, if you are not armed with the latest preforeclosure information and techniques, it is quite possible the investor will become overwhelmed and possibly drown in a sea of financial losses.

It's important to understand that even in a distressed market like today, motivated sellers are aren't going to magically appear and speak directly saying, "I need to sell my house to you and you only." 

With more than 1.2 million foreclosure, preforeclosure, bankruptcy, FSBO and tax lien listings, it's important for training in the analysis and search of large and complex databases of foreclosed homes and investment property information. Being able to identify opportunities while researching top lending institutions and government agencies Real Estate Owned; Department of Housing and Urban Development, Department of Veterans Affairs, Fannie Mae, and other government agency and financial institution properties is essential.

A trained investor will know the plus and minuses of private deal "buying equity," i.e. investors pay the owner a fee and then take over the existing debt and the home. This protects the homeowner's credit report from the black mark of foreclosure.

As well knowing that buying equity this way is difficult in a seller's market because the owner could just as easily sell the home and usually pocket a greater amount in appreciation than an investor would be willing to pay.

Buying during the foreclosure period is one of the best ways for anyone to get involved in real estate investing. With a small investment and some specialized knowledge an investor can buy a house at a substantial discount and resell it retail gain up to 15% - 20% profit in the process.

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

Market to Market Real Estate

The glut of foreclosed properties is causing problems for those wanting to sell their homes. It's a good buyer market right now but as far as selling...it's problematic. From July through September of this year, California alone reported one foreclosure filing for every 88 households.

With homeowners facing pre-foreclosures and bank-owned or foreclosed on the rise, nationwide, the American dream of owning a home is being pulled out from under the feet of families from all walks of life. Foreclosures were up 41 percent during 2007's first six months compared to the first half of last year.

With the market as it is, the savvy real estate investor is taking courses and attending seminars. They are schooled on how public court documents provide you with information about homes one month to six months before foreclosure. Knowledge with real "take-away" value is offered by the most sought after courses and teachers. For example, in every state, a legal notice must be filed before a foreclosure can be finalized. Knowing the length of time between the initial legal action and the final resolution varies nationwide, but the procedure is the same. In most states, a forcible detainer is filed. It may indicate the property address, name of the homeowner and amount owed. Armed with the last information for key markets, the well trained investor is aware that this action is filed before the actual foreclosure and gives you enough information to contact the homeowner directly.

The major benefit of buying a pre-foreclosure home is that it's not an emotional event. It's all dollars and cents and the opportunities, we're seeing now some of the most target rich opportunities in years.

The Country Talks

The number of houses selling in middle-America is almost half of what it was two years ago. "It was so hot before a couple years ago, right now it's so dead I'm not seeing the houses move like they were before," say local residents. According to analyst and real estate investors, banks are currently accepting extremely low offers. With foreclosure activity doubling nationwide from the same time period in 2006, mortgage lenders are preparing for even more defaults as adjustable rate loans continue to reset to higher interest rates in the next quarter.

P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/

The signs are apparent for any homeowner. Home foreclosure is right around the corner if you've fallen behind on repayment of loan and the house is serving as collateral. However there are tools available for these situations. Anyone who is facing the threat of home foreclosure needs loss mitigation services or the short sale option to prevent this from happening.

First line of Defense

Surprisingly, most homeowners and property owners are not aware of this term or the method involved with the process. That is not until they need to hire the service. But once an individual is faced with home foreclosure, there is very little choice but to seek the services of a mitigation specialist. As the sub prime crisis continues, there are an increasingly large number of Americans who are facing this situation.

Loss mitigation is a method through which one can stop the foreclosure of their home. Falling back on repaying the loan can happen due to several reasons. It can be due to some unexpected expense, some unforeseen health condition that requires spending lots of money or may be simply because planning out the monthly budget ended up costing huge amounts of money. Whatever may be the reason for falling behind on the payment of the loan money or the mortgage money, you should immediately approach a specialist's assistance.

Pro Active Choices

The short sale in real estate occurs when the outstanding obligations or loans against a property are greater than what the property can be sold for. Short sales are a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling with lender.

As always there are a few rules to use. Verify the value of your property. If you are selling the property through an investor, your broker will provide you with an estimate of market value. Determine the amount owed against the property. This will be the total of all loans against the property. Have the investor contact the lender. Some lenders are willing to work with you by reducing the amount owed or making other arrangements. The IRS often gets involved with short sales, because they are seen as a relief of debt and may be treated as income. Check with your accountant.


P.S. If you haven't signed up for my Free Short Sale Course yet, then youare really missing out, go here: http://www.freeshortsalecourse.com/