Short Sale Tip # 8: The Role of Loss Severity In Short Sales
February 27, 2008
Short Sale Tip # 8: The Role of Loss Severity In Short Sales
Do you speak “banker-ese”? If not, you are leaving HUGE amounts of money on the closing table! When performing a short sale you have to be sure that you are negotiating from a position of strength. Do you know what Loss Severity is?
Continuing our Short Sale Tip, have you ever heard of the term Loss Severity? If not, roll up your sleeves, get a cup of coffee and snuggle up to some banker talk. Loss Severity is the technical term for the bank’s internal auditing and
calculations to determine how bad they are going to get hit on a foreclosure.
Loss Severity is the rate of loss on a liquidated mortgage and is defined as follows:
the outstanding principal on the mortgage loan – the realized loss over
the outstanding principal on the mortgage loanFor example, let’s say Mr. Smith owes the bank $300,000.00 and if the bank forecloses on Mr. Smith and eventually gets a judgment for fees, unpaid interest, and legal costs now the bank is owed $315,000.00.
The bank then sells the REO property for $265,000.00. On that sale of $265,000.00 the bank had commissions and holding costs, maintenance costs, closing costs, and taxes and they actually only netted about $240,000.00.
Then the bank would have realized a loss of $75,000.00. ($315,000.00-$240,000.00). Based upon this scenario, the Loss Severity Rate would be about 25%.
Lately, this would be a GOOD deal for most banks. Data obtained from from LoanPerformance Inc. indicates that the national average of the severity of losses for mortgage holders on foreclosed properties is peaking around 30-40%.
How bad is it, New Hampshire which is never mentioned in foreclosure discussions is one of the best in keeping foreclosures to a minimum and their Loss Severity rate is approximately 29%!
Are you ready for the big ending…the average national Loss Severity rate is 41%. Please understand..this actually means that for every $100,000.00 that banks are lending out, if the property goes into foreclosure they can only expect to recover on average about 60-70%…that’s amazing!
So do you think the bank wants your client’s home..NO WAY!
The bank does NOT want the house. It wants to be paid off so it can make more money and have more money to lend out and profit from). So now you know the truth. Every agent involved in a short sale needs to understand what is going on in today’s financial market. You are the professional…it’s time to get paid like one…but you need to be educated like one.
In our seminar workshop we’ll show you how to “get ugly” and negotiate like a pro with a banker that’s trying hard not to tip his cards to you. We say this is a bad poker game and we’re prepared to show you how to go “All-In” and win the big pots..the BIG discounts!
I challenge you..no I ABSOLUTELY compel you, to find one single seminar that gives you this kind of information. We do..you know why..we actually DO short sales and we can show you how to successfully do them as well.
Click Here For A Free Downloadable Copy In Our Free Forms & Documents Section
If you are ready to take the next step in your real estate career and want to learn how to profit from foreclosures, make sure you enroll in one of our upcoming Pre-Foreclosure / Short Sale Seminar Workshops.
You will learn how the foreclosure process works and how you can profit from this growing market. Instead of thinking that the market has turned against you, get educated and learn how to take advantage of this unbelievable opportunity for the educated real estate industry professional.
Ultimate Pre-Foreclosure & Short Sale Seminar Dates (more to be added)Ultimate Pre-Foreclosure & Short Sale Seminars (online version) : Learn the “Art of The Short Sale” from the quiet comfort of your own home or office. (coming soon)March 8, 2008 – Miami, Florida – $250.00 discounted to $195.00 if you register prior to March 1, 2008 – REGISTER NOWMarch 15, 2008 – West Palm Beach, Florida – $250.00 discounted to $195.00 if you register prior to March 8, 2008 – REGISTER NOW
See our video below to see what some of our past attendees had to say about the Ultimate Pre-Foreclosure & Short Sale Seminar!
This seminar presentation is unlike any other short sale seminar on the market. Many of our attendees have taken the class 3 and 4 times or more!
90% of our seminars sell out in advance.
If you feel that you can become a short sale expert by taking a rip-off imitation seminar or a free board seminar, then you are really missing the boat on short sale opportunities!
For more information on the 2008 Ultimate Pre-Foreclosure & Short Sale Seminar Series, please call us at 954-566-0923.
hey barry – once again your great – I’m bangin’ away on that lender – they are reacting – but I need to get paid more for what i do and ….cause it’s 10:30 at night and I’m still working!!!!
How do I get paid more?
hey barry – once again your great – I’m bangin’ away on that lender – they are reacting – but I need to get paid more for what i do and ….cause it’s 10:30 at night and I’m still working!!!!
How do I get paid more?