Fighting Foreclosure One Short Sale at a Time
By: Diana Olick
Air Date Jan 09, 2008
Reporter: Fighting foreclosure one short sale at a time. CNBC’s Diana Olick is on the HomeFront and she explains a strategy that is helping troubled home owners and savvy investors.
Commercial: Need to sell your house now? Call 1-800-CashOffer.
Diana Olick: In today’s market, this may sound too good to be true. But it is one of the fastest growing investment opportunities around and it’s actually saving some Americans from foreclosure.
Jeremy Brandt: The dramatic increase in foreclosures has caused our investors to really focus on doing short sales.
Olick: Brandt’s company matches investors with distressed home owners who want to do what’s called a “short sale”.
Brandt:: And there is where they go to the lender and say “we know this is a long drawn-out process, it takes a long time and is very expensive for you. We’ll offer less than the loan balance for the house but you don’t have to foreclose.”
Olick: More banks and lenders are responding, knowing that the costs of foreclosure and carrying a house on their books in a down market far exceeds selling off the loan at a loss.
Brandt: Most investors will ask for a discount of anywhere from 30 to 45 or 50% off of the full market value of the house repaired.
Ahlzadeh: Do I make millions of dollars at this point? No. Do I make a good living? Absolutely.
Olick: Dave Ahlzadeh invests in short sales. He has signed up with 1-800-CashOffer, and for a fee they refer calls to him.
Ahlzadeh: I buy low, and sell low.
Olick: Ahlzadeh is now getting upwards of 200 calls a month.
Ahlzadeh: I’ve been hugged after settlements for helping people out of their situation. And do I make a profit? Yeah, that’s what I’m in business to do.
Olick: The only trouble with the short sale now that banks are accepting so many more of them apparently they are having trouble handling all the volume. But, on bright side, one hurdle to the short sale has been removed, congress passed the mortgage relief act which removes a tax penalty for home owners who sell their homes for less than the mortgage debt. The IRS used to tax mortgage forgiveness as income.