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Seven Biggest Mistakes in Short Sale Investing

by Chris McLaughlin on November 10, 2008

Mid-Day Market News & Commentary by Chris McLaughlin, November 10, 2008
http://www.shortsalesriches.com/welcome.html

Don’t miss this webinar!  We’re holding another webinar on The Top 12 Strategies for Short Sales Riches this coming Tuesday at 9 PM EST, 6 PM PST.  This is something you just don’t want to miss!  Register today:
https://www2.gotomeeting.com/register/324799291

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The market was higher in morning trading as investors cheered a $586 billion stimulus package from the government of China.  The China bailout is seen as assisting many of the multinational US companies such as Caterpillar or General Electric.   But the sheer size of the stimulus package gives many hope that the US government will also propose a stimulus package that will jump start consumer confidence as well as housing demand.

Meanwhile, the nearly trillion dollar bailout is getting spent faster than many folks can count.  The Federal Reserve and the Treasury Department announced another $40 billion will be committed to help bail out AIG, making the total bailout of the insurance giant around $150 billion.   The additional $40 billion comes out of the $700 billion recently approved by Congress.

In other bailout news, Fannie Mae announced that it is burning cash and might need some more government help.  The mortgage-finance giant reported a staggering $29 billion dollar loss in the quarter.  Ouch.

And shares of automaker General Motors (GM) slid to a 60 year low today after analysts forecast that the company may run out of cash in April 2009.  Analysts slashed their price targets for the company, with Barclays now targeting GM at $1 a share and Deutsche Bank taking its price target to $0.  Some stock commentators believe that there will be limited government intervention to possibly bailout the automakers. 

Circuit City filed for bankruptcy protection.  The nation’s electronics retailer will shed 700 jobs and will close approximately 20% of its stores.  

Yeah, it was a bunch of bad news today … but don’t let it get your down, just learn more about short sales and REO properties.   This is your time.  This is your moment.  Make it happen for you.

I just love this quote I found:

“God grant me the serenity to accept the people I cannot change, the courage to change the one I can, and the wisdom to know it’s me.”  - Unknown

So now that you know it’s you, and that this market is what you make of it, let’s talk about the seven mistakes most Realtors and investors make with short sale investing.

The mistakes in short sale investing might come as a surprise to many in the real estate industry; after all, the media is filled with news about escalating bankruptcies, banks dissolving overnight and loss of consumer confidence…obviously it’s a buyer’s market.  Unfortunately, availability doesn’t translate into information so the majority of would-be buyers simple don’t understand the who, what, how and why of short sales as evidenced by the seven biggest mistakes below:

1.     Thinking rather than doing. Short sale investors that think about buying but don’t actually ever get around to putting a plan into action are not buyers or investors – just dreamers. Stop procrastinating and take action.

2.     Failure to follow the rules. Each and every bank, buyer or broker has a process that must be followed. One of the advantages of dealing with Short Sales Riches is the ability to learn a proven system that gets results rather than having to start from scratch.

3.     Improperly presenting your case. Make no mistake about it; successful short sale negotiations require a solid presentation to the buyer and the bank. Fortunately for you, there isn’t any need to recreate the wheel – simply adopt what has been proven to work and begin building your own short sale profits.

4.     Failure to take risk. Playing it safe has a time and place but there are times in life when risk is rewarded; ask yourself, how have your stocks and bonds performed over the past few years? Is your job keeping pace with inflation? Can you afford to retire if the current financial trends continue? If you are like most Americans then it is time to take a chance on something different; something you are able to control, something everyone needs.

5.     Substituting Attitude for Accomplishment. With enough credit cards and lines of credit it’s easy enough for nearly anyone to “act” wealthy but when times get tough suddenly things fall apart. Successful and wealthy individuals may not always look rich but they have staying power and actual accomplishments to prove their net worth. Forget finding fame and fortune overnight – success is typically the product of planning, preparation and tireless pro-activity. 

6.     Last minute thinking. It never fails; a flood of offers at the final hour. Unfortunately, last minute thinking puts you into direct competition with all the other procrastinators and eliminates the opportunity to fix potential problems that may arise. Instead, jump in early before the sleepers wake up.

7.     Putting all your hopes into one property. This is particularly true of short-sale newbies; don’t fall in love with a property. Keep your options – and mind- open to different types of properties. Keep the real objectives in mind; profit potential.

More tomorrow…

See you at the top!

 

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

Phone: (800) 452-7627

 

P.S.: You are going to be on our Webinar tomorrow night aren’t you?  As Jim Rohn said: “If someone is going down the wrong road, he doesn’t need motivation to speed him up.  He needs education to turn him around.”  Get that education now:

https://www2.gotomeeting.com/register/324799291

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Senate Set to Vote on Bailout Plan

by Chris McLaughlin on October 1, 2008

Market News & Commentary by Chris McLaughlin, October 1, 2008
http://www.shortsalesriches.com/welcome.html 

The Dow Jones Industrial average traded sideways today, ending the day down 19.59 on the day.  The U.S. Senate prepared to vote on a bailout plan tonight as vote getters added on lots of popular provisions to lure new supporters to the package.  Chief among the new provisions will increasing FDIC insurance to $250,000 from $100,000; the bill prevents the FDIC from charging its member banks more in order to cover the increase as well and enables the FDIC to borrow directly from the Treasury should it need additoinal capital.

The Oracle of Omaha, Warren Buffett, went on a buying spree again today, buying $3 billion in General Electric with a buy price of $22.25 along with a 10% dividend.   The goodwill the Buffett brings will enable General Eletric to sell $12 billion of stock.  Buffett said, “GE is the symbol of American business to the world…I am confident that GE will continue to be successful in the years to come.”

Car makers plunged today, as tight credit and gas prices are keeping customers away from showhomes.  Ford Motor’s sales plunged 34 percent, and Toyota, the manufacturer of the popular fuel efficient Prius Hybrid, still had sales tank 32%. 

Now, on to real estate and investor education …

When it comes time to present an offer on a short sale, learn to recognize these unhealthy home traps then either walk away or use this “Housing Hit List” to further (and often dramatically) reduce the price of the home. Remember, once identified, even “as-is” homes must disclose known defects so taking the time to perform a few inexpensive tests can result in saving thousands or even tens of thousands of dollars from already reduced market rates.

 

The Unhealthy Home Hit List…

 

1.     Lead. Prior to 1978, most homes used lead based paint. Since lead is known to cause mental retardation and health issues among children, it is federal law that all rental units notify potential occupants of the possible existence of lead in homes built prior to 1978. De-leading can be done but may be expensive especially if the home also used lead pipes. Other potential sources of lead contamination include the soil surrounding the home. If in doubt – test paint, water and soil samples for lead.

 

2.     Radon. This colorless, odorless gas is frequently found in some areas of the country especially in newer homes that tend to be tightly sealed and “weatherized”. Purchase an inexpensive radon test kit to find out if a potential property is impacted.

 

3.     Mold/Mildew. Insurance companies hate it, consumers fear it and most savvy investors realize how easy it can be to remedy. Prior water damage from flooding, roof damage, pipe problems or other humidity control issues can lead to the presence of mold and mildew.

 

4.     Air Quality. The Environmental Protection Agency has recently released studies indicating the air quality in some homes to be worse than the smog of Los Angeles…quite a feat if you think about it especially when you realize the worst culprits are not toxic waste dumps or super fund sites but rather indoor pollutants. In most cases things like air deodorizers, cleaning agents, carpeting and other common materials contribute to degraded air quality issues. Test the air then search for the source. In most situations, air vents, enzymatic treatment and other simple solutions fix the problem.

 

5.     Water Quality. Although not always as simple to fix as air quality, water quality issues aren’t always a deal breaker; iron, sulfur and calcium build-up might be unsightly but presents little real health risk. Homes with private water sources are particularly susceptible – and can often be corrected with the addition of a professional filtration system.

6.     Asbestos. Used in everything from roofing tiles to fireproof surrounds, asbestos was a favored building material for years. Unfortunately, it is also a known carcinogen that requires specialized handling and disposal.

7.     Meth and Other Drug Lab’s. From flop houses to full blown meth labs, sooner or later most short sale investors will come across a foreclosed home contaminated by drugs. It is important to understand the local, state and federal guidelines required to properly recondition the home prior to making a bid.

More tomorrow…


Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

Phone: (800) 452-7627

P.S.: 

So we’re going to do it again this Thursday at 7PM  ET.  I received lots of e-mails from the East Coast begging for an earlier time, so here you have it!  We’re hosting a Webinar (you need a computer and a phone to participate).  Last night’s webinar was nearly sold out, so if you’re interested in learning how to make money in this market jump on this now and register while we still have openings:

https://www2.gotomeeting.com/register/779139540

 

P.P.S.: If you want to have a great laugh, check out this latest  YouTube video about some hate mail that Nathan and I received!   Here’s the link to our YouTube site:

 

http://www.youtube.com/shortsalesriches

 

and if you like what you see in the video, then go here and take action:

 

http://www.shortsalesriches.com/welcome.html

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