Rpt Short Sale Secrets

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Trump’s Insider’s Secrets of Short Sale Success can help you make serious The financial

money when the economy is volatile and prices are low. It’s a tried and true way to start creating your fortune—and you’ll be doing it the classic American way—through real estate.

unrest in the housing industry has created the largest real estate fire sale in history. It’s a buyers’ market and an incredible timing opportunity. Take advantage of it by learning exactly what you need to profit and prosper.

—Donald Trump

The $700 million bailout is all the proof you need that there is an unprecedented opportunity for you to become a real estate millionaire. Banks are so strapped for cash you can make property deals they can’t refuse, even with little to no money. The credit crunch can mean a wonderful opportunity is just waiting for you to seize it. In fact, when credit is tight and other investors are sitting on the sidelines, it can be your time to make a fortune. If it appears everything is upside-down financially, it is. Normally you go to a bank looking for money for real estate. But now banks need you to bring money to them. That means real estate opportunities that only come around perhaps once in a lifetime are not only present today, but plentiful. They’re available right now and you don’t need a realtor’s license to cash in. Best of all your credit score is irrelevant. Whether you have cash is irrelevant. You can turn the crisis that banks are feeling into big profits going directly into your pocket. Many people say that real estate has created more millionaires than any other asset in America. It’s more than a road to wealth, it’s a super highway! Stocks, the other traditional way to make money, is a distant second. Especially today.

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SECRETS OF SHORT S ALE S

In today’s uncertain market, the stock market is a rollercoaster off its tracks and little more than gambling with paper. When its value is gone, it’s gone. Like Enron, not worth the paper it’s printed on. Millions are feeling the pain of trusting a market that cannot be trusted. Ask anyone looking at his or her shrinking 401K accounts right now; perhaps even your own 401K is dwindling. Real estate, however, is real. That’s why it’s called “real” estate. It doesn’t disappear in bad times like a worthless stock certificate tossed in the trash. Land is under everything. You can print more money—but you can’t make more land. That’s why real estate will always have the upper hand long-term. New land simply isn’t being made and yet the population keeps on climbing. Real estate values always recover from downturns and reach new highs making millionaires in the process. It’s a financial escalator. All you have to do is get on and ride it up. That’s why the current financial “crisis” is actually a financial opportunity. How did this opportunity happen? Let’s take a Trump look at it.

Is It a Crisis? For every dollar of equity many banks had made, they racked up $33 in debt. [NYT 3 Oct 08] For every dollar they earned in the last few years they’ve wiped it out— and lost even more. [NYT 17 Oct 08]

Forget all the hype out of Washington D.C. The crisis is easy to explain: People bought houses they couldn’t afford and banks made more bad loans than they could cover. Short and simple. For every dollar of equity many banks had made, they racked up $33 in debt. [NYT 3 Oct 08] For every dollar they earned in the last few years they’ve wiped it out—and lost even more. [NYT 17 Oct 08] That amounts to some $275 billion to the good—gone forever. That means there’s far less money—or no money—to lend. Credit has evaporated. And when you’re a bank if you don’t lend money you don’t make a profit. If you don’t make a profit you go out of business. Banks need money to stay in business, and without banks loaning money or extending credit, our economy tanks. Notgood. That explains the $700 billion bailout. And, $250 billion of it has already been released to get banks lending again.Let’s hope this strategy will get consumers feeling good about spending again. Modern economies run on credit and with no money to loan economies fall apart. Although $700 billion, the total estimated fallout, is a hefty chunk of change, think about it in personal terms…say you had a lot

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of money. Life is good. Then suddenly you found yourself deep in debt. Life is bad. Then, just like that, you get a windfall of cash—say a big check from Uncle Sam. What would you do with it? You’d likely be a bit more careful and hang onto every penny you could. Well, that’s exactly what banks are doing. The bailout isn’t working yet because banks aren’t lending the money yet. Bottom line: The banks are hanging on to the cash and still hurting for money. How does that help you? Easy. You can put together real estate deals that bring banks cash and reduces their financial woes. The bank is happy, you’re happier, and you can do that with or without your own money. A lot of Trump graduates are doing just that right now, and so can you. The key is in knowing how to drive the short sale in the current market.

Who Went Down? We all know the names of the big banks that sank or are sinking; major players in the world money market; the financial equivalent of supertankers, except empty. Bank profits have evaporated, and the bailout won’t help the banks for a long time. It’s as much a psychological nightmare as it is a financial one. The bailout money is supposed to replacewhat banks lost—and get them lending again—but they’rekeeping it in their pockets. Meanwhile every new foreclosure is a threat to their existence. So, perhaps for the first time in modern history, banks that would never think of working with private investors need them desperately now. And that’s where you can make your fortune with real estate through short sales. Shortsales create hefty profits. You can bring money to the banks and make a bundle in the process. Let’s walk through an example. We’ll then look at theshort sale phenomenon in more depth.



Today, short sales are a bonanza. I n fact, the short sale gold mine is so deep and wide, you can create short sales every month or every week for years and still not bottom out.

The Short Sale The homeowner bought his house in the year 2000 when the prices were low. He paid $125,000 at 8.5% interest, fixed. By 2006, the house was valued at $225,000. But today, it has slipped back to $180,000. The homeowner has paid some $85,000 in interest so far. But, because the interest on a loan is paid first he still owes about $120,000 on the property. On the surface that’s not bad; he owes $120,000 on an 8.5% fixed loan. But he lost his job eight months ago. He went through his small savings and now he’s missed two mortgage payments. Soon the bank will reluctantly start the foreclosure process. You see, the bank really does not want to take the house back. Why? First, they’ve already had too many loans go bad and have taken back too many foreclosed properties, technically called “non-performing assets.” Even in good times that’s a bad position to be in because it limits how much money the banks can lend. Every foreclosure reduces profit and drags the bank closer to failure. This is where you can step in with deals the bank can’t say no to. The bank has already made about $85,000 off the house, so they’re still out around $40,000 from what they originally loaned. The house will soon become a “non-performing” debt headache—not to mention the worries of taxes, upkeep, utilities, and legal liability. The reality is, the bank doesn’t want the house, and if you can offer them a way to make a profit and dump the house, they will listen. The way you do that is through a short sale. Short sales have always


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If you want to be truly financially secure, an ironclad

been a specialized technique for the real estate investor—oneof many tools usedoccasionally for the right deal. That’s in normal times. These are not normal times. Today, short sales are a bonanza. In fact, the short sale gold mine is so deep and wide, you can create short sales every month or every week for years and still not bottom out.

millionaire, this may be the best opportunity you’ll ever have.

If you want to be truly financially secure, an ironclad millionaire, this may be the best opportunity you’ll ever have. You’ll never make a million-dollar salary working for someone else, but savvy short sales can put a million dollars in equity into your pocket. Short sales are incredibly powerful. Best of all there’s very little work to do on your part. Short sales can help you amass a huge fortune immediately, especially now. It’s all a matter of specialized knowledge and attitude. What many people are calling a frightening crisis is really an incredible opportunity for the savvy real estate professional. Here’s the short way to create financial security:

Creating a Short Sale You go to the homeowner who is nearly broke. He has already run through his savings, maxed out his credit cards, and sold off personal items. He’s getting tired of the battle. Soon he will lose his home through foreclosure. That’s a financial black mark worse than bankruptcy because it will last at least 10 years. He wants to get it all over with and your short sale offer gives him a way out that can keep his credit intact. With the homeowner’s agreement, you go to the bank to negotiate. Even in a down cycle the house is worth $180,000. The homeowner owes $120,000. The bank has gotten back $85,000 of the original $125,000 loan. So they’re still out $40,000. The bank is hurting for cash and does not want another foreclosure property. You offer to buy the house for $60,000. That plus the $85,000 paid in so far is $145,000 total for the bank, or $20,000 more than the original loan. Now the bank has a change of attitude. You’ve created a way for them to dump the non-performing problem and pick up $20,000 to the good. They would jump at the chance in this market. So you get the house worth $180,000 for $60,000, at one-third of its value. Is that a bargain? Absolutely. And you can do it in many instances without using a penny of your own money.



End Use Before making such deals, however, you need to know your exit strategy. What will you do with all the property you’ll be picking up at a deep discount? Your intended use drives the financing.

Depending on how you have structured the financing, you can keep the properties. This is called buy and hold. Unless you count mythical examples such as Atlantis blowing up, there has never been a real estate problem that time did not correct. Real estate runs in cycles. All you have to do is sit back and let time make you big money.

Even in a tight market, bargain houses go fast. There are always people with money looking for a steal.

While you hold the property, you can rent it. That way you have a steady income stream and your wealth increases with each passing day. Another option is to sell the property. You can do this easily, even now when seemingly every other house is for sale. You can even move into one andupgrade from your current home or apartment. The short sale is also a low-cost way to purchase your first home, or a home for elderly parents who may need to move closer to you. Since you will be buying property far below not only fair market value but also below what was owned on the mortgage, you will have created instant equity. That means you can sell the property quickly because you can price it below market value and still make a huge profit. Even in a tight market, bargain houses go fast. There are always people with money looking for a steal. In the example above, the value of the real estate is $180,000. You bought it for $60,000. Any price you sell it for more than $60,000 is profit. If the depressed market value is $180,000 do you think selling it for $160,000 will attract buyers? Of course it will. Subtract your purchase price of $60,000 and you walk away with a profit of $100,000. And you can do this time and time again without any money of your own. How many $100,000 deals do you have to put together to make your life better than it is now? One? Ten? Only you know how much money would make life good for you but it’s entirely possible to earn that magic number through short sales. Do ten deals like this in a year and that’s a million dollars cash. But what if you don’t have any cash to get started? Not a problem.


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Financing Where does the $60,000 come from to make this short sale deal work? If you have it, you can use your own money. A lot of people starting out in real estate, however, don’t have that kind of money and banks are certainly not lending it easily. However, if you put the right deal together, the money finds you. That’s a financial fact: If you work out a deal that can turn a foreclosure into a short sale, the money to get the deal done is easy to find. You absolutely do not need to have any money to take advantage of the fortune-making opportunities available right now. You can get money based on the value of the deal, not on your credit score or on how much money you actually have. There is plenty of private money available for done deals in today’s market. Private lenders want to lend money now because this is a prime time for them to make a profit. When banks are lending easily, private lenders have a challenging time. When banks aren’t lending, like now, private lenders are looking for good real estate transactions. They want to loan money. With the backing of a private lender you can take an offer to the bank that looks attractive to them. The bank is happy to get rid of the foreclosure and make a profit. You score a sweet deal. Let’s look at that profit math again: You let the house go for $160,000, pay backtheprivatelender$60,000 and put about $100,000 cash into your pocket. That’s pretty good. It’s also the time to remember the homeowner. The homeowner has gotten out from under a mortgage he can’t pay and has kept his credit record intact. It’s a fact that a foreclosure is a greater financial black mark than bankruptcy. The homeowner has been in crisis mode for months. He’s financially and emotionally beat. Now he’s out in one piece but is flat broke. You can give the homeowner some seed money to get started again. Provide a few thousand dollars to move and set up an apartment. Not only will it help ensure the property is vacated in good condition, but when he has a friend in foreclosure, whom will he recommend they call? You. That’s business you don’t have to look for. Soon you can pick and choose from the offers. In the end, everyone wins and you get the potential inside notice on more deals. That’s another good aspect about short sales.



In-depth Look Now that you have an overview and understand the basics of how a short sale works, let’s take a closer look at Trump’s Insider’s Secrets of Short Sale Success and foreclosure.

Foreclosure has three stages. 1) Pre-foreclosure. This is the rocky financial time the homeowner has before foreclosure starts. 2) Foreclosure. This is when the bank is in the process of taking back the property back. 3) Post foreclosure. Here, the bank owns the property again. This is also called a REO, which stands for Real Estate Owned. We’re not interested in the final two stages, just the first. A short sale is getting in at the beginning of the process, during pre-foreclosure. That’s when you can make an offer the bank can’t refuse. You’re likely to have no competition and that gives you first crack at a bank that’s been bleeding money. How do you do that to your best advantage? You use Trump’s Six Short Sales Secrets.


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Six Short Sale Secrets

1

T E R C E S

Short Sale Secret #1: Find and Sign First, you have to find homeowners who are getting close to going into foreclosure. You want to know who’s been skipping mortgage payments or has been underpaying for a couple of months. They are prime candidates for the short sale. You can find them on your own or you can learn the specialized locating techniques Trump graduates use to find them quickly. Distressed homeowners are the source of your deals and you can find them where you live or around the country. Some people knock on doors to find the deals. Some do mailings, emailing, and mass phone calls. Trump graduates use far more effective ways to find those deals. For example: toll-free numbers, Google ads, or a simple website, (provided free or for a fee). After you find a potential short sale candidate, always get an “authorization to release” form from the homeowner. It does no good to contact the bank when you do not have the legal authorization to make offers on the property. Besides, it’s always better to have to have the homeowner involved in the process. Also, don’t waste time. When you contact the bank for a short sale package, have them fax it to you. Snail mail takes too long. You want to turn the deal as fast as possible. This is also when you submit the makings of the deal to private money lenders, and you submit to more than one. Let the private money lenders compete for the opportunity as well. They will independently check out the value of the property and how much the deal is worth. They will all tell you how much they are willing to finance. For you, it comes down to choosing the best deal. Private lenders charge higher interest rates than banks, but if your strategy is to buy and sell quickly, the interest in the short term is a minor business expense.

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T E R C E S

Short Sale Secret #2: Identify Key Players Don’t deal with people put in the way to keep you away from the decision makers. You’re not a clerk for the dealmaker. You are the dealmaker. Likewise, don’t deal with clerks for the decision maker. Deal directly with the decision maker. It is important that you have direct contact with the decision maker. (A loss mitigation department at the bank usually handles this.) Get his or her direct line, personal email, and fax number. You will want to contact that person directly, a lot. Make it clear that you are there to make a deal, and the deal is now, and it needs prompt attention. You are there to bring the bank cash.



3

T E R C E S

Short Sale Secret #3: Give Them More Than They Want All banks have a short sale package they will send you, asking the questions they think will help them decide whether to accept your offer. Fill out the short sale package and then some. This is one case where more is better, but don’t you do the work. This is where the homeowner comes back into the picture. Put the homeowner to work ahead of time to provide records beyond what the bank is asking for, records that show the financial state of the homeowner. This should include pay stubs, tax returns, bank account statements, a hardship letter written by hand, a clean and lean Purchase and Sales agreement, and an estimated net sheet (HUD1.) The Hud1 is the first thing the lender will look at. It’s where they usually find a reason to turn you down. You have to make it failsafe, which Trump graduates know how to do. (And if homeowners are not motivated to do all this, move on to the next property. In time the homeowners will become motivated. Make a note to call them back in a few weeks. Time is on your side.) By giving the bank more than they ask for you are giving the bank every reason to say yes and no reason to turn you down. Meanwhile, you run an inexpensive title check. Always run a title check to make sure the titles are clear and there are no title surprises at the last minute.

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T E R C E S

Short Sale Secret #4: Quick Turnaround The bank faxes the short sale package to you and because you have had the homeowner collecting the material you get it back to the bank in 24 hours. Serious investors don’t waste time. The sooner you have your profit, the quicker your fortune grows. Also, many states have a very short foreclosure cycle, some just a few weeks, so the quicker you work, the greater your chance of success. The quicker the lender reads the package, the quicker the negotiation start, and the quicker you make money. More than that, action gets things done. Letting deals sit on a clerk’s desk helps no one. Driving the deal brings results. Sometimes you can turn it around in just days, increasing your net worth in just 72 hours. Trump graduates know how to turn deals fast.

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T E R C E S

Short Sale Secret #5: Know the Art of the Deal Know what homeowners and bankers are going to ask, and how they are going to object to your offer. You won’t be debating every topic on earth, just a few key areas, and you can learn the elements of each ahead of time and what to say. It’s like preparing for a debate: Know both sides. You should have an answer for every possible objection offered. You should also know what not to say. You should know all the figures, what your exit strategy is, and how much leeway you have to change your offer by the amount of money the private lender is willing


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to put up. Even if you are using your own cash, you should have the same information in mind going in. Also the bank may have sent a real estate agent to look at the property to evaluate it; the so called Broker’s Price Opinion (BPO). They tend to evaluate high, causing the bank to ask for more. You have to know how to reduce the BPO to something more favorable. That can be done by knowing what the agent’s looking at to form an opinion. This is also why you need to know how to access the condition of real estate and what work it will need, if any. Since you are working with the cooperation of the homeowner you have the advantage of seeing the property up close. People who buy foreclosures in the last two stages often aren’t allowed to look at the property they are bidding on. By getting in at the beginning you know far more about the property than do second- and third-stage buyers, which is a distinct advantage to you.

6

T E R C E S

Short Sale Secret #6: Your Offer to the Bank Should Embarrass you On first mortgages, never make any offer more than 50% on the face value of the loan. Never more than 25% on any second mortgages. Not more than 1% on any third mortgages. Don’t worry that your offer is low. All the bank will do is ask you to raise it...and you can, a little, if you want. On our earlier example, the bid ($60,000) was less than half of what was owed ($125,000) and a third of the fair market value ($180,000.) You want to buy the property for the lowest price possible, and banks will want to get as much as they can. There will be a profitable compromise where you both are pleased, if you start out low enough. So, make your offers embarrassingly low. And don’t forget, sometimes banks say yes at even a rock-bottom offer.

Where to Find Deals With these six short sale secrets you can start finding opportunities and start making offers. Don’t just stop at one. The better you get at handling simultaneous deals, the sooner you will start carving out your slice of the big money being made in short sales. Don’t limit yourself to just your local area. The deals are everywhere, in every city and state. With internet resources you can uncover great opportunities anywhere in the country, particularly in hard-hit areas. Often foreclosures are clustered in certain zip codes or gated communities such as a housing development. That’s because many properties shared the same over-extended developer so the foreclosure rate is higher. There are also several cities and states that are leading the nation in foreclosures. These are prime areas to look. If you are a Trump graduate, use your specialized locating techniques.



Evaluate. Evaluate. Evaluate. Because you’re interested in the short sale as a moneymaking real estate tool, here’s one more bit of advice from the experts at Trump University. As with any piece of property, evaluate the short sale deal before anybody signs anything. Know before you go. Learn before you leap. Finding the right set of financial circumstances is excellent, but also make sure the property is worth your time and effort. When analyzing and putting a deal together, here are some common property issues you should take into consideration in addition to the financial dynamics. First, assess the condition of the property and estimate any repairs. You do not want to buy anything with hidden surprises because that could cut into your profit. Next, evaluate the location, either for use or resale. As with any piece of property, especially residential, find out what the neighborhood is like and how the schools are. Drive by at night and evaluate any change in character happening in the neighborhood. Also look into whether the property can be rezoned for a higher and more profitable use. If the bank does not have this information it may help you counter the Broker Price Opinion ordered by the bank. And of course, working with the homeowner in a positive situation also allows you a closer and more accurate evaluation of the property than the realtor will make. To help you keep on track with a short sale, we’ve included a wallet-size ca rd with the six short sale secrets you can keep on hand. Refer to it so you don’t miss one. It’s a list of the essential steps you need to start making your fortune in short sales.

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What Next? Traditionally, real estate success is based on a number of techniques and strategies. But that’s in a normal market. This is not a normal market, and it won’t be for sometime. In this current real estate cycle, one technique is absolutely the way to wealth: The short sale. Anyone who wants to amass the huge wealth that real estate can generate needs to harness the power of the short sale. Using these six secrets can lead you to that wealth. Whether you master them on your own over time or you learn them quickly by studying with wealth-generating professionals, you need to know them now if you want to take advantage of the current fantastic opportunity. You need to master them if you want to create Trump-size returns in real estate. There are lot of Johnny-Come-Lately people and websites offering short sale training, but none have the Trump experience, insight, or real-life success in finding opportunity and turning it into wealth. There are no short cuts to short sales. If you are going to learn, learn the best from the best at Trump University. To discover more about the wealth you can make with Trump University’s Insider Secrets of Short Sale Success visit us at:

TrumpUniversity.com Trump University’s Insider Secrets of Short Sale Success 1. Find and Sign 2. ID Key Players 3. Give Them More 4. Quick Turnaround 5. Negotiate (Assess the property) 6. Low Price


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A Very Special Offer:

FR EE THINK BIG CONSULATION You took an important step to achieving your dream of financial freedom when you downloaded this special report. You definitely had the right idea. Becoming a real estate entrepreneur and leaving the rat race behind has changed many of our students’ lives forever. Now these students don’t just dream about a more secure financial future, they live it every day. We understand that it isn’t easy to take the steps necessary to control your financial future. The daily pressures of the 9—5 grind can consume anyone. But ask yourself, when will you make the changes in your life required to: i Get out of the i Create

rat race,

multiple streams of income,

i Become

debt free,

i Pay for your children’s education, and i Retire

rich.

The truth is, there will never be a perfect time to take control of your financial future. And sadly, most people will never have the courage to begin and will always wonder what could have been. But we want to help you kick-start your drive to financial freedom. Because you’ve already shown us that you have the passion and motivation to change your life we are going make you a very special offer. We are going to give you a free 20-minute Think Big consultation with one of Trump’s Success Coaches. Talk to them, share your goals and dreams and they can help you find the right path to your financial success. And please, don’t waste any more of your time because life is too short to dream…you need to start doing. To claim your free consultation simply log on to www.TrumpUniversity.com/ThinkBig and complete a short registration form. Our Success Coach will review your information and contact you within two business days. It’s that easy so please make today the first day of your drive to financial freedom.

Enjoy the journey!


©2008 TRUMP UNIVERSITY

Copyright © 2008 Trump University.All rights reserved. No part of this document may be reproduced in any form, including photocopying or transmission electronically to any computer, without the prior written consent of Trump University. The information contained in this document is proprietary to Trump University, and may not be used or disclosed except as expressly authorized in writing by Trump University. Trump University assumes no responsibility for errors or omissions that may appear in this publication. While all attempts have been made to verify information provided in this publication, neither the Authors nor the Publisher assume any respo nsibility for errors, inaccuracies or omissions. Any slights of people or organizations are unintentional. Company names and product names mentioned in this document may be t rademarks or registered trademarks of their respective companies and are hereby acknowledged. Trump University reserves the right to change this publication at any time without notice. The content, strategies, forms, checklists and legal documents contained herein are for illustrative purposes only. Trump University does not render legal, accounting, investment or tax advice. You should seek the guidance of professional advisors in any transaction. Insofar as local laws, regulations, customs and practices vary widely from area to area, the form contracts presented herein should not be used without the input of a local professional and a clear understanding of your rights and remedies. You are advised to retain competent counsel to determine what state and/or local laws or regulations may apply to the user’s particular business. This report is provided for information only and no guarantees, promises, representations or warranties of any kind regarding specific or general benefits, monetary or otherwise, have been or will be made by Trump University, its affiliates or their officers, principals, representatives, agents or employees. Trump University is not responsible for, and shall have no liability for any business success of failure, acts and omissions, the appropriateness of the reader’s business decisions, or the use of or reliance on this information. Real estate investing, just like any other business, does contain risk. Real estate investors can both make and lose money on any given transaction. Like the stock market, poor decisions may result in the loss of all or part of an individual’s working capital. Caution should always be used.


©2008

Rpt Short Sale Secrets

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