Our Real Life Short Sale Experience - Brown Street

Today we will begin explaining the progression of a completed short sale project in Harrisburg, Pennsylvania.  We will cover all aspects of the project in detail from the acquisition of the property all the way through to the sale and humorous aftermath.  Each day we will post new details, including before and after pictures, so feel free to check back daily to see how the project progressed.

The project we are discussing today is a 4 bedroom, 2 bath single family home in the suburbs of Harrisburg, Pennsylvania.  In an effort to protect the privacy of the previous and current owners, we will refer to the property simply as the Brown Street property.

The Brown street property was found by canvassing pre-foreclosure leads in Harrisburg.  I have found that using the internet foreclosure leads is sometimes useful.  However, I have also found that in most markets they have either been sold to too many investors, or they are so dated that the effective time left to contact the bank has already ended.  Depending on the laws and availability in your area, you may benefit from visiting the courthouse and collecting information on foreclosure leads in person.  This is the only way to ensure the information you are receiving is correct, up to date and relevant.

Unlike most investors, I do not send the standard small postcard card saying “I will buy your house” or “stop foreclosure!”  I typically write a sincere, empathetic letter explaining that I understand the stressful situation the homeowner is in and that I am available as a free resource for any questions or assistance they may need.  I am also very honest, explaining that it is my goal to purchase houses from those homeowners who are no longer interested in maintaining their homes , but that it is also my goal to help alleviate the stress that is involved in these situations.

 This advertising methodology obviously cuts down on the amount of letters I can send, but it lets the potential sellers understand that I am willing to listen and help them as well as looking to make a profit.  Because of the blunt and somewhat condescending nature of some of the postcards I have seen, it is easy to understand why many homeowners would not be interested in working with investors during such a stressful time.  

From my carefully written letters I get a much higher call back percentage, usually 20-30%, so the extra time and effort involved is worth it in my opinion.  Most of these calls are from individuals who had fallen on a little bad luck and who are interested in keeping their homes.  I take the time to carefully listen to them and usually advise them that their best option is to call the bank and speak with the loss mitigation department.  I have gotten many thanks from people who were able to keep their homes and might not have been otherwise if they hadn’t gotten over their fears.

The owner of the Brown Street property, who we will call Pam, contacted me and the first words she said was “I just want to get rid of this house.”  She had had decent paying, steady employment and had maintained the family home and finances for several years.  Her husband had also been working and contributing to the bills.  However, at the same time her husband was laid off, Pam began experiencing medical problems and was forced to stop working.  She knew she could no longer afford to pay for the home and raise her children.  As a side effect of her medication, Pam’s condition also made it very difficult to care for her 6 children (who lived in the home) or keep the home in fair condition.

I am explaining the household circumstances because I personally feel each short sale situation is made up of more than just the hard numbers.  There are human components that go into making a successful project.

It is important to remember that though you are technically buying the property from a mortgage company, the homeowner has a great deal to do with how readily the bank will deal with you.  The homeowner will have to submit a hardship letter, provide income verification and possibly even medical records.  If you do not have compassion with the homeowner they can make the sale difficult or impossible for you.

I met with Pam for several hours and discussed her situation.  Because she had already decided she could no longer keep the house, our conversation focused on the strategy of negotiating with the mortgage company for a short sale, as well as what accommodations could be made for her children.  During our conversation I made sure to listen to Pam’s concerns and address each one of them.  She was comfortable with my explanation of the process and was willing to help as much as she could in the short sale negotiations.

To see additional information (including the gruesome pictures) about this short sale experience and others, visit our site at www.InvestorToolsOnline.com.  Tomorrow we will discuss the actual financial figures involved in the transaction, including the purchase price and how the short sale was negotiated.  Be sure to check back tomorrow!