The Lender Does Not Pay For Anything in a Short Sale

This is one of those misunderstood technicalities that I face every time I work with a potential short sale candidate.  The common mis-understanding has been that when a home is sold short of what is owed, the lender or lien-holder pays the associated costs of closing the transaction such as broker commissions, seller’s closing costs, HOA dues and transfer fees, 2nd lien-holders, etc.

This is actually not true.  The lender is not a party to the purchase contract.  They are an authority whose decision the contract is contingent upon.  A lender’s role is to approve of a lesser payoff than the amount owed.  When the lender takes less, they make room for the seller to pay the fees associated with closing the transaction.  Those fees come from the buyer’s purchasing power, and the 1st lien holder is basically saying, “we’ll allow the funds coming from the buyer to be credited to the seller in order that the seller may cover the associated costs of closing the sale.”

To have a successful short sale with a home owner who has no money to bring to the table, the lender must reduce their payoff enough to allow the difference between the purchase price and the net payoff to the lender to add up to the seller’s closing costs.

It may appear that the lender is paying the costs because they are accepting less than what is owed, but this isn’t actually the case.

On paper, on the HUD-1 closing statement, there is no mention of the lender paying for anything.  The HUD is a document outlining what the buyer pays for and what the seller pays for.

For instance, if the sale price of a home has been negotiated between the buyer and the seller to be $200,000.00, but there is a balance due on the 1st lien-holder’s note of $250,000.00, and there are commissions, closing costs, HOA dues, and taxes to be paid, the lender is going to have to accept less than $200,000.00 by exactly the amount of the closing costs.

Add together the closing costs and the net payoff to the 1st, and you should reach your sales price.  The lenders do not pay for anything in a short sale.

A New Outlook…Or Maybe Not So Much

2009 has been a long year. It has also been the most prosperous year I’ve ever experienced. It has been a year of shifting perspectives, innovative tools, unexpected hardships, and unexpected blessings. It’s a year that I’ve spent re-acquainting myself with me in order to move forward with a new outlook on life and how I live it.

It’s funny that I should say that I have a new outlook on life because this article is precisely about how I’ve eliminated one outlook that I couldn’t seem to work around. And when I say outlook, I literally mean Outlook…Microsoft Outlook.

For years I’ve used Outlook as my primary communication tool. Calendars, Contacts, Tasks, Notes, and E-mail all contained in one convenient location. For years I’ve cursed at my computer time and time again when what I believed to be the necessary evil (Outlook) would fail to open, crash, slow my system down, you name it. The only reason I stayed with it so long was because of Exchange Server. The two together make for a seamless integration of all of your devices, keeping all of your data in one location accessible anywhere.

Trapped in the confines of Microsoft’s infrastructure has been the only option until recently. And by recently, I mean within the past year or so. You see, the functionality offered by Outlook and Microsoft Exchange is not exclusive to Outlook and Exchange. It is a concept; an idea that all of your information should be in one location and you should not have to do things more than once, and that duplicate information is inefficient.

The problem has been that the only tools available require spending more money than any of us want to spend on these things. How much does a day-planner need to cost? That has changed.

I credit this personal shift to a conversation I recently had between Loren Kutsko, Director of Strategy and Information Management at Food for the Hungry, and Mark Kaech, Grassroots Campaigns and Special Projects, also at Food for the Hungry. It’s inevitable that when you put us together, we’ll talk about the latest tools and happenings in the technology world. When I expressed my apprehension about making some major shifts in how I manage my information, which ultimately translates into a more seamless transaction in the real estate contract process, I was met with the reality that I was still doing things the “Gen-X” way, and not the “Gen-Y” way and that the tools that I need are available at a fraction of the cost.

As someone who considers himself open to change, to be struck with the possibility that I’m not standing at the front of the technology-progress boat anymore caused me to reassess my ways.

The Challenge

I’ll keep this simple. I want my contacts on my iPhone to be identical to my contacts on my computer. When I read a message in my inbox and it’s marked unread, I want it to be universally marked unread so I never have to read it again unless I need to re-visit the message. I want my calendar on my phone to have the same information as my computer, and the same information as my online calendar at Google.

I want complete and seamless synchronization of all of my data so I can get to it anywhere, anytime.

The Old Solution

Microsoft Exchange Server in concert with Mobile ActiveSync, Outlook, and Outlook Web Access. If not self hosted at my own facility with over $6000 worth of hardware and software required, at the very least, paid for on a single-user basis at an exchange hosting company for about $10.00/month.

The New Way

This is so simple it amazes me that I didn’t think of it before. A note of caution. If you aren’t willing to rethink how you manage your information, almost completely, you’ll be very frustrated if you try to do this.  In fact, you may not be able to do this. There are also some pre-requisites that are assumed prior to making this type of change.

• You need your own domain name.  Lose the gmail extension, the yahoo account, the free e-mail identity.  Get your own domain name and start branding yourself personally so you never have to change it.  If your company gives you an e-mail address, use it for company communication only, and get your own identity.  you@yourname.com is far more valuable than you123@yoohoo.lame.com.
• You need a smart phone, and preferably, an iPhone.  More tools will emerge at lower and lower costs, but this is where I am today.
• I matters not whether you have a MAC or a PC anymore.  Entourage and Outlook are no longer needed.
• Please use either Firefox or Chrome as your primary internet browser.  Internet Explorer should only be used if the idiots on the other end of the website you need to use have failed to develop a more compatible site and it requires Internet Explorer to work.  Safari will suffice, but I personally avoid it.  Firefox is my first choice for now.

So What are the Changes I Actually Made?

I moved all of my data from Exchange to Google.  I moved my calendar to Google Calendars, my contacts to Google, and all of my e-mail to Google.  My notes are kept nice and neat using Evernote, my tasks…well, I never used tasks because we still need a good system that supports task dependencies and hierarchical action plans.  My website resides at another hosting provider, but all of the e-mail traffic is bounced to Google and handled by Google in a very easy to use Gmail interface.  No, I do not have a @gmail.com address.

How did I do this?  Well, it didn’t happen overnight.  I have lots of information that needed to be moved, and I’m still sorting out a few things here and there.  My website never went down, but my e-mail was interrupted for a few hours, so if you do this, you should make it a late night event.

All of these steps were accomplished in phases to ensure it was going to work, but there were some leaps of faith involved.  I made sure to get into the forums on Google to search for potential problems, then I dove in.

Before you do anything, backup all of your Outlook data.

Step 1: Establish Google Apps account for my domain.  (assumes you have a domain name already: www.godaddy.com to solve this problem.)

This is so easy.  Go to www.google.com/apps and sign up for Google Apps for Business.  It’s $50.00/year per user.  Go for the free 30 day trial (you can click here for that).

Step 2: Using the MX settings that Google gives you after you’ve setup your account, go to your domain manager at Godaddy.com or wherever you registered your domain, and modify the MX records.  Don’t screw it up and record the settings that were already there.  If you need to call someone there, do so.  They’ll help you do it.

Step 3: Watch the mail start rolling in.  It takes about 2 hours or so to kick in.

Step 4: Setup a new e-mail account on your iPhone using the gmail settings.  Now you have completely synchronized e-mail on your phone and through your gmail interface.

Step 5: Export all of your calendar data from Outlook or Entourage, or from wherever you keep it.

Step 6: Import your calendar from within your new Google account.

Step 7: Export all of your contacts from whatever program you’re using.

Step 8: Import your contacts into Google.

Step 9: Setup a new mail account using the Exchange option on your iPhone.  Follow these simple instructions to do so. Since you have already setup a mail account on your phone, make sure that your iPhone is set to sync only Calendar and Contact items, not mail.  The iPhone only allows one exchange configuration, so having a recent backup is going to make your life much easier at this point because you can delete your current exchange setup (if you have one) without losing your data.

Step 10: This is the last step.  Login to your Google Apps account (http://www.google.com/a/yourdomain.com), click the Service Settings tool bar item and then Mobile at the bottom of the drop-down menu.  Make sure you enable Google Sync at the bottom.

That’s it.  Your e-mail will be delivered to Google, you’ll be able to use the Gmail interface to manage it, and you’ll have it on your mobile device on demand.  Your calendar and contacts will begin to fill up in your phone, seemingly magically, and everything will be synchronized.

Mashable.com recently published these findings regarding Gmail vs. Outlook. I stand with Google now.

Oh, and the very very last step.  Uninstall Outlook .

If you need some help walking through this process feel free to contact me and I can help you through.

Coffee Plantation Locks Down WIFI

I recently wrote an article about Coffee Plantation because it’s where I typically go when I need to get out of the house and get on the internet. Today, I purchased my $2.00 coffee (amazing profit margin) and was asked by the Barrista if I had a code?

Me: A code?

Barrista: Yeah, for the internet.

Me: (setting my witty comments aside) No, I don’t. When did you start doing that?

Barrista: Today.

Me: Was there a particular reason you decided to lock the network down? (Thinking it probably makes sense)

Barrista: Well, there were too many people just sitting around using the internet without purchasing anything and it slows down the internet for everyone who is a paying customer.

Me: (thinking initially, That’s not very cool. Coffee shops are supposed to have free internet.) Oh, okay.

The Barrista handed me a little piece of paper with a 10-digit code on it, then clarified that the zero was a zero and not an “O”. Do people really not know the difference between an O and a zero? Anyway…

…so I got my code and I got on the internet, and then I started thinking about the new security measures, and I recalled a few conversations I had recently about how these store-front coffee shops in high rent areas stay in business when the majority of their patrons sit around and cruise the net all day. Prior to today, I could simply sit here, not buy anything, and use the internet. I don’t do that, but it was possible.

(on a side note, Coffee Plantation finally added a flavored coffee of the day since the new owner took over. I like it. Today it’s Irish Creme. Yesterday it was Creme Brulee)

Problem 1

How does the coffee shop police the code that they just gave me? I can post it here, on twitter, and I can staple it to my forehead.

Problem 2

When the code changes, who’s going to let me know about it? It seems like a decision that includes too much high maintenance to actually be effective.

Solution

Here’s where my innovative mind kicks in. Design a wireless router that works in tandem with a networked cash register, yet works like a Guest Gate access point securing the internal network from the patrons. Every day, the wireless router generates a new code after closing. When a patron purchases something, the cash register accesses the router and looks up that code, then delivers the code on the receipt.

Now, that brings up the problem of receipts, which nobody needs to be printing any more. So how would the code get from the cash register to the patron without printing? How about text messaging? How do we get the phone number to the cash register? Not sure, but it can happen.

All in all, I think I’m okay with the network being locked down for patrons only. It makes me feel a bit more important. Now they just need to make it cooler.

Read or Watch: Shifting From Text to Video

Part of building a successful business is engaging your customers online.  In order to do that, you have to read what they have to say.  There are so many writers out there that are terrible at conveying their point in writing, that it becomes difficult for someone like myself to follow along.  I’ll typically lose you very quickly if you aren’t very clear and very simple about what you’re attempting to convey.

So, as I’m reading along, a title catches my eye, and I click on it.  I notice right away that even though my interest has been captured by a catchy headline, there’s absolutely no logic applied to how the article is written.  No sub-headlines, no highlighted important words, and no pictures whatsoever.

I’m the type of person who will be “more likely to read” if you eliminate the text and replace it with video.  In this shifting business place, where recording high quality HD video is a matter of a small inexpensive portable HD camera, short of being absolutely, unequivocally disastrous on film, it’s time to start dialing down the text and dialing up the video.

If you haven’t figured out by now, video has been taking over for quite a while now, and will continue to take over, and it will draw the eyes of thousands and thousands of people and hold their attention much longer than reading text.

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