Latest / Real Investor Radio Podcast / Ep 89 | Short Sales, Appraisal Process, Deficiency Judgements, Market Trends with Rebecca Ravera

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Ep 89 | Short Sales, Appraisal Process, Deficiency Judgements, Market Trends with Rebecca Ravera · Real Investor Radio Podcast

• Craig Fuhr (00:12) Hey, welcome back to real investor radio. We have an awesome one for you today. Joined again by the great Jack Bevere. Jack, good to see you. I don't know where you're coming from today. It's clearly not the studio of you know that we normally see but looking good as always hair is flowing lovely. And so, Jack, a couple of things to talk about before we jump in. Jack BeVier (00:21) Good morning, sir. Great to see you. Craig Fuhr (00:38) One, five year continues to be helpful. A little bit of an upward rise over the last few days, but I feel like we're quoting DSCR loans with interest rates that make a little bit more sense for long-term long-term hold investors. What's your take on that and sort of where you see things going over the next few months? Jack BeVier (01:00) Yeah, I think April was a really, really good sales month for us on the DSCR side. The world started to calm down a little bit and people were like, yeah, I do need to get that refi done after all. so, you know, life goes on and yeah, the five years kind of holding steady right now and threatening to come down. The shorter, the whole shorter end of the curve is starting to come down right now and there's more pressure on the Fed to drop rates as well. They're being stubborn, stubborn about it. There was a meeting yesterday and they decided to hold rates, but Craig Fuhr (01:25) Yeah, I just saw a just saw a truth social post from Trump. He called Jay pal a total fool. So I'm sure that'll ingratiate him for a rate cutter too. Yes. Jack BeVier (01:25) You know. Always entertaining. ⁓ but so you know, just more feels like more stability in the market, people are less concerned that the tariffs are going to be like doomsday. And so capital markets are starting to settle down, which is good for rates and good for borrowers. Craig Fuhr (01:49) So a few weeks ago, we were talking on the podcast about housing vouchers. And I didn't get a chance to read the entire article that our producer, Gab, sent over to us because I didn't have access to the housing wire article. So did you get a chance to read that? So the gist of it was is that folks feel like that there may be pressure on the Jack BeVier (02:09) Yeah. Yeah. Craig Fuhr (02:18) on the voucher program from the new administration who might be looking to cut it significantly. So give us your take on that. Jack BeVier (02:26) Yes, so the new the budget proposal for HUD would be a humongous overhaul. It would be essentially move money, move that source of funding to state level block grants for that money to be administered on the state level without federal oversight, which probably doesn't change much, I think, because why would they change the rails? Just use the existing infrastructure and change the name at the top of the letterhead to provide the same services. but it also incorporates pretty significant budget cuts and a structural change that housing choice vouchers only last for two years. So it's meant to be like an, so there's an off ramp, right? Cause right now, once you get a voucher, you, as long as you maintain your good standing and your income stays below 80 % of area median income, you're a voucher holder for life. So, you know, the, policy proposal is that it should be an off ramp that there should be a two year, know, this should be a two year kind of booster seat as opposed to something that is permanent support. Of course, for those that are able bodied, so disabilities aside, you know, if you can prove that you can't work, that would be an exception. You know, it seems but anyway, pretty significant budget overall budget cut though. And given that structural change that they're proposing, you know, that would definitely be a humongous shake up to that system. Craig Fuhr (03:44) Yeah, I can't. I would be interested in seeing how states take on such a massive role. It's not as if they don't already. But I mean, if you're put if you're giving a block grant to the states, there's going to have to be some, I would think significant infrastructure for that to be. Jack BeVier (03:45) yeah. Yeah, you'd also have it'd be interesting because then they'd have the opportunity to write their own rules and tweak the HUD guidelines and make them a bit more state specific. So you'd have like so being like, you know, a housing choice voucher landlord would be materially different in New York than it would in Georgia. Right. ⁓ Yeah, yeah. So that could be that would that would be it could be, you know, a big shake up. That said, the you know, all the ex Trump. Craig Fuhr (04:16) Yes, it would. Or Maryland. Rebecca Ravera (04:19) Thank you. Jack BeVier (04:27) Trump proposed something similar during his first term and what happened instead was a budget increase for HUD and for housing choice vouchers. So, you know, all the experts and policy pundits are saying that these ideas are dead on arrival, that there's no way they're making it through Congress, but it's a political statement. like, you know, let him make his political statement, but no one's like losing any sleep over it. So that was kind of the gist of the article. Craig Fuhr (04:43) Noah. I agree. I do wonder though, like we have some note buyers, Jack, that would traditionally be, you know, would take section eight vouchered tenants, you know, section eight vouchered leases, they would, they would underwrite that if there was a section eight voucher lease, then at some point earlier in the year or last year, we saw that some note buyers are no longer accepting DSCR loans, where there are where there is a section eight tenant, right? And so did they know something that we didn't know? Were they forecasting something that we didn't know? Jack BeVier (05:24) yeah, like, I don't think so. I think it's more based off of just like personal bias of the policymakers, you know, who are making who are writing those guidelines, because we see certain DSCR loan purchasers who are unfriendly to Section eight, they're very, scared of it, they want to get like, validation that this isn't too low end of an area that the market rent is appropriate. And then you have other loan purchasers that are like, it's the federal government paying your rent, like this is this is the best thing ever. Like, why wouldn't we want this program? So Craig Fuhr (05:48) All Jack BeVier (05:52) You get literally completely different perspectives, both from people who consider themselves to be mortgage credit people. So I think it's probably based more off of like preconceived notions and personal bias than than, you know, an actual credit decision. Craig Fuhr (06:07) Yeah, well, we'll keep an eye on that. And honestly, I'd probably like to talk more about that as as that story continues to unfold. I think you're right. I don't see it making through Congress, but I don't see as with all things legislative legislative. I think they just take another bite of the apple, you know, that the administration does and see if they can pass something that's maybe not shooting for the stars, but getting somewhere in between. But But let's go ahead and get our guest in today. Couldn't wait to have her on. So today we're having Rebecca Rivera. She is a short sale expert, started off in Maryland. today, 14 years later, she's done over a thousand short sales. And the reason why we had wanted to have her on Jack is because frankly, I think we're seeing sort of an uptick in short sales around the country right now. Like, I was taking a look at some of the the I basically did a search for any markets where we've seen a 25 % year over year jump in short sales. No shocker that you know, Sacramento, California, Florida, Washington DC, Texas, Arizona, Nevada, all the all the usual subs suspects, Michigan, you know, Sacramento is up 142 % in short sale listings over the last year. And then all the rest of them go somewhere between 60 % down to 25 % year over year. So not insignificant. Anyway, Rebecca, old friend. I'd like to say that I was the first did the first short sale ever with her back in back in Rebecca. It's true, right? Jack BeVier (07:40) Is that true? Rebecca Ravera (07:42) So just a second. Anna, this has been draft. Craig Fuhr (07:45) First, I'll Jack BeVier (07:45) Thank Craig Fuhr (07:46) take a top three, I'm gonna say. But ⁓ surprisingly, after me being such a pain in the ass, she still stuck with it and now is one of the biggest experts in the country at getting these deals done. Rebecca, welcome to the show. Couldn't wait to have you on. Jack BeVier (07:48) Top three. Rebecca Ravera (07:49) Absolutely. Absolutely. Thank you guys for having me. I'm so grateful to be here. ⁓ yeah. So just a little bit about me. I've been licensed 16 years and, 14 years ago, I had my first short sale and I just fell in love with it. I love problem solving aspect, the, you know, really pretty getting in there and just going from, you know, the transaction. And you were of course, one of my first to go. That's fun. But. Craig Fuhr (08:07) So yeah, go ahead. Rebecca Ravera (08:30) You know, 14 years later, I have an incredible team and we focus in Maryland, DC, Virginia, Pennsylvania. We have one in North Carolina, one in Georgia. So we're expanding pretty rapidly. Craig Fuhr (08:46) Is there anywhere where you won't do one? it, you just have to be licensed in that area or will you basically take a client from anywhere? Rebecca Ravera (08:54) So once a client from a different state comes in, do have to like, just make sure that there aren't any special licenses or regulations that you've had in that state, because everything's state by state. But if there aren't any special regulations, I'm happy to take it and try it. And if there are, I'm happy to get another license or certificate from whatever we need. But in the states that we work in, there's no special sorts of negotiation licensing. There used to be in Maryland, but it went away with quite a few years ago. Craig Fuhr (09:20) See. Jack BeVier (09:20) You're really performing two different services there, right? Like there's the short sale negotiation, is not a regulated service. And then there's the selling of the real estate, which of course requires a real estate license. Where's like the line between those two? where's the handoff exactly happen? Rebecca Ravera (09:33) Right. Yeah. So in Maryland, real estate agents are not allowed to negotiate a short sales. So I don't negotiate a process. So we list and process the court cell through, all of our systems. And then I have a second company, capital for itself group, which is a third party for its own negotiation company for realtors and their friends. And that's where we operate in all the other various states for my, my listing for itself business. That's just in Maryland. Jack BeVier (10:02) Gotcha. Gotcha. Craig Fuhr (10:04) So Jack, I don't know how many short sales, well, maybe you could tell us, how many do you think you've done over the years or participated in or bidded on or gotten to the finish line? Yeah. Jack BeVier (10:15) Me? don't know. A hundred, dozens, know, dozens to a hundred somewhere in there. Craig Fuhr (10:20) So Rebecca, as I recall, and it's been quite some time, this was never a fun process. So when I first started getting into short sales, mean, it was like shooting fish in a barrel, Jack. You would find a property that was in distress. You would go meet with the homeowner. It was a much different, you were wearing all the hats in the transaction, essentially. Then Marilyn got wind of a folks that were doing that pass some regulations and I guess laws. And so you couldn't is it is it true Rebecca that you I can't be the investor, the guy who's negotiating the short sale. And I even had I had my real estate license back at the time, and then list the property and then I bid on the property myself like I can't do all of those things in Maryland, correct? Rebecca Ravera (11:07) Right. So everything has to be completely arm's length. I even have a situation where a realtor was trying to sell the property as a standard sale and couldn't get it sold. So we referred it over to him and said, Hey, I'd like to buy it if they have the opportunity to. We went through the process. He was the buyer. And then the bank actually said, we will no longer do business with this individual because they were the listing agent at one point, and now it's no longer arm's length and it looks really scary. So there's a lot of regulations on short sales now. Banks are doing lots of audits. Some of our files get stuck in audit for three to four months where they'll go through everything tooth and comb, just to make sure that there's nothing weird going on, everything's arm's length, there's no special deals, anything like that. Especially since the indictment of the short sale claim came down in either November or December, all the banks have been really cracking down on everything. Craig Fuhr (12:02) Well, tell us more about that. So where was that? Rebecca Ravera (12:05) So that was in Texas. So Nicole Espinosa is being the short sale queen. It's trademark. And the reason I know it's trademark is because I was called the short sale queen a lot. I got a fun season business letter slash two years ago. So, right. Yeah. I texted my attorney after I saw the indictment and I said, so can I be the short sale queen now? He's like, stay away from that name. said, Jack BeVier (12:17) Yeah. Craig Fuhr (12:18) I like to think of you as the short-sale princess rather than the queen, you Jack BeVier (12:21) Hey, well, she's in jail now, so, you know. Yeah Craig Fuhr (12:31) Right? It's Rebecca Ravera (12:33) We got it. Craig Fuhr (12:33) kind of a kind of a not the best brand anymore. Jack BeVier (12:36) No, no. Rebecca Ravera (12:36) Just to say I'm honored that somebody in Texas sent me a cease and desist. So I was like, well, that's nice. So that was really cool. there were a lot of just document forgery, well, allegedly document forgeries and things going on. And FHA and Federal Housing Administration just caught wind of everything. And so they're really looking at all the files now just to make sure everything is going right and everything is legal and compliant. And as soon as that indictment came down, we checked, we shifted everything in our business too. Like I called my team and I was like, we're not doing any of this. And they're like, no, no, no, we're good. And I said, all right, I just wanted to make sure, because we don't want to be in any similar situation. We're very, very, you know, above board. do everything by the book and we're very successful that way. Craig Fuhr (13:22) want to see if we can like dissect it for the audience. You know, everyone knows what a short sale is at this point. And we like to think that we're speaking to, you know, more experienced investors here. So I don't think we need to get down too far in the nitty gritty. But like, as I recall, it was a process that was absolutely cloaked in a crap ton of paperwork. And if that paperwork wasn't in the exact order and the exact things that then everything breaks down. So let's see if we can break it down quickly. Are you contacted mostly by homeowners who are distressed and looking to list their house and then you discover that it's a short sale or is it an investor that's sort of bringing you the opportunity and saying, I think this is a short sale opportunity. I don't want to have to go. I can't go through all the paperwork and they bring you the opportunity. So what's the percentage of your business of those two? Rebecca Ravera (14:17) Yeah. So first of all, we do zero advertising. So every bit of our business is word of mouth. And for the listing real estate business, it mostly comes from real estate investors where they find these homeowners in distressed situations, they're underwater and they'll call me up and they'll say, look, the seller agreed to some of the house. We got to title, we pulled the payoff and there's too much out on the properties. Or they didn't tell me they were behind or they have. partial claim, which is a silent second mortgage placed on the property from a loan execution. So they'll refer to homeowners. The homeowners already agreed to sell them property. So we go through the process of the short sale. If the investor can get the house, fantastic. That's awesome. If not, we still work with the homeowner, get the property back on your market at the approved price, help them avoid foreclosure, all of that. So it's really a win-win for everyone because nobody wants these homes to go to foreclosure. There's so many other opportunities and options. If the investor gets it, they can take a dilapidated property, renovate it, more inventory for homeowners, rents, neighborhoods, all of that. And the homeowner doesn't have foreclosure. it's a... Craig Fuhr (15:22) All right, so you skipped a lot of steps there. So investor brings you a deal. It's clearly underwater, hands it off to you essentially, and then you get with the homeowner to collect, I guess, all of the documents. And, and is it still like a Rebecca Ravera (15:35) Right. Jack BeVier (15:37) Do they need to be late on their mortgage still? I'm sure there's like short sale myths and you know that like, you maybe we'll debunk a couple of short sale myths while we're talking. Do you need to be, how late do you need to be to have your short sale application considered? Craig Fuhr (15:46) Yeah. Rebecca Ravera (15:46) Yeah. So the funky thing is every mortgage company has their own regulations and then every investor, which is the entity that owns the notes. So FHA, VA, Fannie Mae, private conventional investors, they all have their own loans. So the only time I've successfully been able to get a short sale through where the homeowner was current was on a VA loan. And I'm working a VA file right now where the servicer. won't start the short sale process until the homeowner is 91 days behind on their mortgage. So you have your VA guidelines and then you have your service or guidelines. So it's a lot to know and remember. Every bank has their own documents. Craig Fuhr (16:34) So. Jack BeVier (16:34) Are those guidelines published? Rebecca Ravera (16:36) So they are. The FHA handbook, it's over 1,400 pages and the guideline is somewhere in like page 1112. So yeah, so they are published somewhere. We have a lot of them in our system. So if you do want them, we're happy to share them with you, but it's difficult to find them when you are looking for them. Jack BeVier (16:43) Yeah, 100, yeah, yeah. Craig Fuhr (16:58) My guess is that they're murky as mud as well, so. Jack BeVier (17:01) Yeah, right. And like, yeah, what's written in the document versus like the experience that you have when you email is like a completely different thing, right? Rebecca Ravera (17:01) they are. Everything's up for interpretation. Craig Fuhr (17:08) And so. Jack BeVier (17:10) Yeah. Craig Fuhr (17:11) And so the docs that you must collect, does that vary between servicer to servicer or is it basically now sort of standardized? It felt very haphazard, you know, back in the day. Is it a standard set of docs now or is it, you know, still crazy? Rebecca Ravera (17:32) So it's typically a standard set of financial documents. So we collect 30 days most recent proof of income, 60 days of most recent bank statements, and then the last few years of cash returns. If the homeowner is deceased, we need a copy of the death certificate and the letters of administration, meaning the personal representative of the estate. And then each servicer has their own set of forms. And then depending on if it's a VA or FHA loan, there is verbiage that needs to be added to the listing agreement or the contract or anything like that. It's really an experience-based business to where somebody can say, this is &T FHA, and I know exactly what needs to be gathered for that homeowner to sign. And some mortgage companies, they still require everything to be physical signature, even listing agreements. They won't allow any electronic signatures. And there are two banks that still require us to fax everything. So I do have a fax machine. People make fun of me all the time. Jack BeVier (18:27) That's hilarious. Rebecca Ravera (18:29) I have a fax machine. Craig Fuhr (18:30) Here comes my 108 pages to you. This is ridiculous. This is crazy. Jack BeVier (18:33) and affects it. Craig Fuhr (18:38) Check. Jack BeVier (18:39) Um, so what's the, um, what has been the, I guess your experience in the business over time, right? 2011, it became like there was a tremendous need for this service. You filled that, you know, filled that gap. Um, and I'm sure your business just took off, but then, you know, I would think like 18, 19, 2021, like things start to slow down, like, you know, very few people underwater in Craig Fuhr (19:00) Maybe the phone runs. Jack BeVier (19:06) 2021, know, like everyone had equity just because of such so much home price appreciation. Like, how is like, the volume of business changed over time and also the different banks appetites to approve a short sale changed over time. Rebecca Ravera (19:21) I'll be honest, my business did not start to slow down until 22. And during 21, we were insanely busy. think in 2020, that was our best year ever for real estate, which is crazy because the interest rates were so low and a lot of people did have equity. and then it slowed down between 23 or 22 to 24, and now it's ramping up like crazy. So we typically get. About eight to nine short sale leads a week. And when I say leads, like people have raised their hand, like, yes, I want to do a short sale. And we're putting them through the process of collecting the documents and getting everything. Once everything's signed, they go active into our pipeline. three weeks ago, we got over 30 leads. Yeah. In a week. In a week. So. Craig Fuhr (20:03) Wow. mostly Maryland, DC, Virginia, Pennsylvania. Rebecca Ravera (20:09) Mostly Maryland and DC. So we're, we're newly breaking into Virginia, Pennsylvania areas. So when we do have contacts out there, they send them right over to us. But like I said, we haven't really done much advertising, so we will be, we will be starting advertising in those areas just because it's less word of mouth, not being directly there. Jack BeVier (20:30) Hey, I forget what's the what's the valuation requirement that the bank needs in order to feel comfortable that the prices, you know, market not like some, you know, 50 grand below market? Is it still an interior BPO? Or what are they doing? Rebecca Ravera (20:43) So it depends. So they'll either do an interior BPO or an appraisal. FHA, Fannie Mae, and VA all require an appraisal now. And what they will accept is completely different. So FHA will accept a net of 88 % of the appraisal until day 61. And then they'll accept 84 % net of the appraisal. The VA will accept a net of 84.05%. Fannie Mae doesn't really go off the nuts. Everything is worked through a third party system where we negotiate directly with Fannie Mae, which is excellent. They're wonderful to deal with. And then with reverse mortgages, if the loan is in default, which means either the property is vacant or the homeowner is deceased, they'll allow 95 % of the appraisal for the gross. If the homeowner is alive or the property is occupied, then they'll want 100 % of the gross. So it varies. Jack BeVier (21:38) And is that who's ordering those appraisals? Are they being ordered through an AMC? Rebecca Ravera (21:43) the bank will order those, the servicing company. There are a couple of reverse mortgage companies that will allow us to order the appraisal on our end, which we do, and it takes a lot of pressure off their shoulders because they are just so busy right now. But there are requirements. The appraiser has to be had licensed. They have to have done business with that company before. So we know when it's this particular lender or this one, we'll go ahead, we'll get one of our 10 people to go out and an appraisal, and then we submit everything with that. Jack BeVier (21:45) Thank you for watching. Gotcha. Craig Fuhr (22:13) So one of Jack's questions was sort of the uptick in volume that you've seen over the years and obviously recently. And then the second part was the bank's appetite to accept these types of offers. Have you seen any changes over the years on that? And then obviously recently. Rebecca Ravera (22:30) So if it's a private investor, people that buy bonds and notes or just smaller entities, they struggle with accepting short sales. I'm not really sure why. For example, just had this particular investor required a BPO. The BPO came in at $311,000. The investor required a net of $375,000. So I don't know if they're doing it. an ABM on the other end or somebody's on Zillow looking up the property values or something, but the smaller investors are giving us a harder time when it comes to those government entities like the VA, FHA, Fannie Mae. It's completely based on what that appraisal comes in at. So their appetite doesn't really change. I will tell you at the end of every quarter, we get more short sale approvals than we do throughout the rest of the quarter. So at the end of the quarter, they're trying to hit all their numbers, get everything in. And that's when we see a slow of like five or 10 approvals in a week. Jack BeVier (23:32) That's interesting. Do you like, what's, where's the line that you have to, in terms of like generating, you, mentioned everything's like all the, you know, all the business that you're getting is referral based. Why not advertise these services? Like, is there a, is there a regulatory line you don't want to get close to in terms of like contacting pre people in pre foreclosure? Or I would think that, you know, I would think the pre foreclosure pipeline, you know, monitor, you know, looking for notice of intents to foreclose in Maryland, for example. would be a really interesting lead source, but you haven't made that part of your machine. Why not? Rebecca Ravera (24:02) It's something I should do and it's something that we're going to implement. And we just were a little short staffed to be able to do that right now too. We need to bring a couple more people on. I have eight people under me right now. So, so it's very complicated. So it is something we are going to do soon. ⁓ Jack BeVier (24:13) Too busy. Sorry, my my free referral sources are keeping us too busy and yeah. Rebecca Ravera (24:23) Yeah, sorry, I'm so busy. don't have time for more business. You know, so busy Craig Fuhr (24:28) Wouldn't Rebecca Ravera (24:29) right now. ⁓ Craig Fuhr (24:29) it would an avenue for generating leads? I would think that like most of the larger let me let me step back. Is a real estate brokerage say like a Keller Williams or any any brokerage in town? they allowed to have a short sale? You know person like you in the in the business or do they have to take all of those leads out to a company like yours to negotiate the short sale and then you you know sort of get the listing back to them. So they find a client, clients underwater, can they do the short sale themselves or do they have to contact you? Rebecca Ravera (25:04) So that's the gray line. So technically real estate agents are not allowed to negotiate short sales in Maryland, which is why I process my listings. Agents should not be handling short sales if they don't know what they're doing. Take the listing, bring in a third party negotiator. We had a file where the listing agent tried the short sale on her own. It was declined twice and it was declined for expired documents needing an updated bank statement or needing an application to be redated for one reason or another. They finally brought us in. submitted everything to the bank and the banks said, nope, we've done it twice. We've denied it. This seller is no longer eligible for a short sale. So because the agent tried to do it on their own and just wasn't educated and experienced on what was needed in this and that, the homeowner is now going to foreclosure and there's no other options. So it's really important to bring somebody in. And in regard to. whether or not we can be affiliated with brokerages, as long as there's no, you know, hidden fees or pickbacks or anything like that. It's not a problem. We work with a ton of brokerages and a lot of brokers specifically when their agents get listings, they're like, you need to call Rebecca. need, you know, you need a professional. Craig Fuhr (26:15) Yeah, that was that was just my question because that's how I was going. I thought, you know, before I met you that I would be the guy that would just go talk with a bunch of realtors. They would bring me the deals, they still get their commission, I wind up getting the house. Obviously, you know, Marilyn stepped in and didn't work out that way. But the quote, so you're going to make your fee, but they're still going to make their commission, right? Rebecca Ravera (26:37) Right. 100%. So we don't get paid unless it goes to closing. So it's in our best interest to make sure it goes to closing. And the way we get paid on the negotiation side is we charge 6,000 or 2 % of the purchase price, whichever is greater, and the buyer pays us at settlement on the HUD one or the ALTA. What we do is we work with the mortgage company to get some of the buyer's transfer taxes covered, their owner's title insurance, and settlement fees. So it really offsets that fee. So instead of paying these line items on the settlement statement, they're paying our fees. And so the agent keeps all of their commission. The seller's not bringing any money and everything's disclosed to the buyer upfront. have forms, have verbiage, everything's on the MLS. So everyone keeps their money. Craig Fuhr (27:17) Yeah, so I mean, I guess that's, you know, just sort of sticking on the marketing tangent here of getting the phone to ring. Why wouldn't you just be out there just banging out banging down the doors of real estate agents and brokerages to get more business? Rebecca Ravera (27:31) So I to a of networking events and I get business that way, but I don't go there with the intention of like holding up a sign, like, hi, hire me. It's just like, so we are preferred vendors for Baltimore road producers, which is all real estate agents. And we get a lot of business from them. And then we are a preferred vendor with Maryland investor network. And that's where a lot of the investor business comes from. So I don't per se advertise, but I go to these events. I'm out there. and the phone rings. Craig Fuhr (28:03) Well, we saw you at one just last week. Yeah, it was. So what's your take on, you know, are the the deals that are happening as a result of short sale? Are they are they singles? Are they doubles or guys hitting home runs with these things? What's your take on it? Rebecca Ravera (28:05) I know, so good to see you. So it really, it depends. It depends on what the appraisal comes in at. Some appraisers are familiar with how to price properties accurately when they need work. And other appraisers are not. They don't understand the cost of the scope of work, of construction budget and all of that. And that all needs to be factored in because you can't just, an investor is just not going to come in and make zero. So it depends on what appraisers. We had an issue in Maryland where a lot of appraisers were coming up from DC and trying to appraise Maryland properties and they were coming in very high at DC prices. So it's just one of those things where we need to make sure the appraisers are educated, the BPO agents are educated and that the appraisal comes in right the first time. Because once it's there, because of the FHA and VA guidelines, we're stuck for six months. So that's really the most important part. It's just making sure you have an appraiser that knows the market, knows what they're doing and knows the cost of construction and what things are going to be. Craig Fuhr (29:19) Yeah. So are we still influencing the appraiser by meeting them at the house and saying, you know, we did, we, kind of did our, our cost analysis on what we're going to do for rehab here. And here's what we're thinking, or is that, we're just leaving it up to the appraiser at that point. Rebecca Ravera (29:36) So we never influence the appraiser, that is illegal. I open the door and make sure that they always have access to the property. The banks will change the locks constantly on these pre-foreclosure properties, even in the middle of a short sale transaction or a real estate transaction. So I am at every appraiser or BPO that I can be at, just because I want to make sure that they're able to gain access. There's no squatters. I was at one last week and I walked in and there was a squatter just hanging out. Craig Fuhr (29:38) We're talking about you. Rebecca Ravera (30:01) in the living room. So we want to make sure everything is good for the properties we never influence. Craig Fuhr (30:05) Very good answer. Jack, you've done these, you know, and I think you have you didn't you tell me that you've done a couple recently that demean properties bought a couple of short sales recently? Don't know. Can't remember. Jack BeVier (30:17) Yeah, I we've been, we've been trying to, we've been trying to source deals off the MLS recently with more frequency. and, I think my acquisitions guys told me that we bought a short sale recently, which I was like, wow, that's, it's been a while. That's, that's great. That's exciting. so yeah, I think it's starting to like, you know, pop up with greater frequency. We bought another one off the MLS last MLS last week. So like, you know, I was, you know, I would have said for like five years, the MLS was completely, completely dead. to investors. But I would say over the course of the past like six months, it's really, you know, there's there's more interesting inventory out there as it's become a bit more of a of a buyer's market with increased days on market and just, you know, seller motivation increasing. Craig Fuhr (30:57) Yes, the re. Rebecca Ravera (30:57) And I think a lot of investors got out of the market too, because during COVID, everybody was like, I'm going to be a real estate investor. And they came in and they flooded the market. And then those people came out. Now more experienced investors are here. So I think that's why there's so many more deals available on the MLS that there weren't previously also. Sorry, Frank. Craig Fuhr (31:15) The reason why I asked about the quality of the deal was it just felt to me that sort of back in the 2000, you know, nine, 10, 11, 12, as, as you went along there, the quality one, the deal took forever to get done. I mean, it was sometimes six months before the thing was fully ready to go. And then two, it just didn't become a deal. there just wasn't enough juice in the deal to make it work. And so that's that. So how long does it generally take now start to finish on one of these files? That's first question. Rebecca Ravera (31:54) So my team is a machine. So we are typically closing files in about three months. The longest one that we have in our pipeline right now is, is nine months. And that one's just a really tricky one. I always tell clients and agents four to six months, just to give us a little bit of wiggle room. And then when we get it approved in three months, we look like rock stars, but we do. So people under us, three of which their only job Monday through Friday, nine to five is to call on harassing. So we're calling each mortgage company on every single file, two, three, sometimes four times a week. And they're like, we'll give you your approval letter. Just stop calling us. Leave us alone. And so that's how we're really able to get things done so quickly is because we just don't stop. very persistent. Craig Fuhr (32:36) shocking to me that it hasn't become more automated, that's not, it's not really a surprise, frankly, but, but, but getting back to the quality of the deal, Jack, that's what I wonder now, like, as we're starting to see more and more short sales across the country, is it really a deal for the real estate investor? So love to hear from folks if they're out there buying them, you know, what you're seeing around your parts in terms of the quote. Jack BeVier (33:00) What's listing requirement? You have to put it on the multiple list, The appraisal is not enough. It still also has to be listed. For how long does it have to be listed? Do you have to sit it out there for two weeks and then present all offers on it? What are the rules around the listing side? Rebecca Ravera (33:18) Yeah. So we list a property, we price it as if it was a standard sale. So typically the payoff, any liens and judgments, and then 10 % to cover any commissions, transfer taxes, all of that. If somebody wants to come and pay full price, fantastic. But what we don't want to do is play a guessing game on what the appraisal or the BTO is going to come in at, because I've seen it vary so drastically. So we just put it up there on what's owed as a full playoff. And it is in the MLS listed as a potential for sale. then when the appraisal or the BPS completed, we then reduce it accordingly to that price. And every investor has different requirements. So FHA has to stay on the market 15 days. The VA and Fannie Mae is seven days, reverse mortgages are five days. So every short sale must be listed on the MLS. It has to be listed for a certain amount of days. I think no matter who the investor is on our loans, whether it's FHA, VA, Fannie Mae, We always keep it on for about 15 days just to make sure that we have enough time. Any offers that come in always get presented to the seller and the seller at the end of the day chooses what offer they want to accept. Jack BeVier (34:24) there is that so it's going on the market at full statement of debt. And then you're accepting offers. If an investor brought it to you, you've got at least one right in the hopper, you know, you know what they want to pay for. But you don't yet know what the appraisal came back at. Rebecca Ravera (34:32) Right. Correct. So most banks don't order an appraisal until after they have all the seller financials and the offer in hand. So once the offer docs are in, that's what triggers that valuation for the mortgage company. Jack BeVier (34:44) ⁓ OK, gotcha. So like if you're an investor and you want to work this stuff, like you really just need to like go to all of them and put your best number out there and then and then hope that the appraisal comes back, you know, congruent with that. Rebecca Ravera (35:04) Right. And if it does, we may have to work a few numbers on the settlement statement to get everything right and all aligned. But then we should be able to get that short sale approval letter. And if the numbers don't work, the investor's not obligated to everything because the short sales are contingency. The numbers have to work. And if it doesn't work, then they can go ahead and withdraw their contract and move on. So it doesn't work to put contracts in arms sales. Honey, I always tell homeowners, like, if you're not getting Jack BeVier (35:24) Yes, sir. Rebecca Ravera (35:31) a bunch of people putting in offers. Any offer is good to accept after that 15 days because that's what triggers the short sale process to get started. And then once we have that approved price, if that investor could buy it, fantastic, you already have an approved offer. If not, at least we're halfway through the process. We know what's going on. We know where it needs to be listed at. And then we can proceed to getting that short sale approved. Jack BeVier (35:53) But you'll have an offer in, then the bank goes and orders the appraisal. And then when the appraisal comes back, you'll change the listing price down to that number, but the contract's already in hand at that point, right? Rebecca Ravera (36:05) Right. The content's already in hand and we have our sellers sign a disclosure stating, hey, we know it's going to be listed this amount upfront. And as soon as the valuation comes back, then we're going to reduce it to this. So everything's fully disclosed. we, so I have one, I have one property that was appraised 45 days ago and it came in at 425. It switched servicers to a completely different servicer. They wanted to order another appraisal. came in yesterday at 300. don't play guessing games that was proof that appraisals and BPOs are completely based off of opinion. So I just, don't even try to play that game. I'm like, all right, let's put it on. We'll pay off if somebody wants to pay it completely off. Fantastic. Craig Fuhr (36:37) you Jack BeVier (36:38) Yeah. Yeah. Yeah. Craig Fuhr (36:46) Type the address in the chat right now. Thank you. Rebecca Ravera (36:48) Thank Jack BeVier (36:49) You any DSCR any DSCR short sales yet? Rebecca Ravera (36:54) So we haven't done DSCR short sales yet. We do have a couple of commercial short sales we're working on. They're tough. Those are very, very tough. The investors are, they provide a set of guidelines to the servicer, the company that is handling the mortgage and the transaction. If it doesn't align perfectly with the guidelines, the servicers are denying the short sales without even sending them to the investor for approval. So we then have to go above the servicer, find the investor, harass them and say, hey, look at this offer, what's going on? So they're offering a lot of deed and lose, which don't really make sense to me because usually banks aren't in the business of owning real estate. They're in the business of lending money. Jack BeVier (37:34) That's super interesting. Rebecca Ravera (37:35) Yeah. Craig Fuhr (37:37) What about deficiency judgments? mean, do you get to a point where you you're seeing that Jack, I'm just kind of bringing up an idea here. So do you see that like when you speak to the seller? Are the are the banks coming after them for the deficiency between what they owed and and what the property actually sells for? Or don't you get involved at that point? Rebecca Ravera (37:58) So I have to inform them and give them a heads up of everything. FHA deficiencies are waived. Fannie Mae deficiencies are waived typically. And I tell people I'm like, look, there's a 99.9 % chance it's going to get waived. Until we have that approval letter in hand, I'm not going to tell you 100 % on anything. I will say that in the 1,000 plus short sales I've done, I've seen one where the deficiency was not waived. And the homeowner had moved to Vegas and it was a VA loan and I called the VA and I said, why aren't you waiving this? You've waived it on all my other files. And they said, well, if the homeowner was to hit it in Vegas, we'd like the opportunity to get our money back. And I said, it's a case by case. All right. That's fine. So I know. Right. Like we shouldn't waive this. Right. So that was really the only time I haven't seen that. Jack BeVier (38:38) That's just like a 27 year old kid, like making a recommendation to his boss. Like he's moving to Vegas. Rebecca Ravera (38:49) Now, there are potential tax consequences and I do always tell my homeowners, please speak to a tax professional, please speak to a real estate attorney regarding this. In 2008, Obama implemented something called a mortgage debt forgiveness act and it stated that if the property was a primary residence, if the homeowner lived there two out of the last five years, and if the forgiven amount, I believe right now it's $500,000 per individual, a million per joint tax return filing, it's all based off your taxes, then When you go to file taxes for that year, your accountant can file forms to make that tax liability go away if not reduced. And so that expired many, many times and was extended. And then in 2019, I believe 2019, it was extended through December, 2025. It will probably be extended again, but if everything lines up, a sort sells basically a get out of jail free plan. Especially if the lender weighs in efficiency, you don't have the tax consequences, all of that. So it is. It is so much better than going to foreclosure. Craig Fuhr (39:48) I mean, other than the hit to your FICO, is it is not as nearly as bad as you going through a foreclosure. Yeah. Rebecca Ravera (39:53) Right, but if you're going to foreclosure, that's a giant hit. Right, right. So it's a better option than a foreclosure. And from credit professionals, I've heard that deed and lose show up on your credit similarly to a foreclosure as well. So I always tell people, speak with a credit professional, speak with an attorney just to make sure that you have all of the answers that you need. Jack BeVier (40:16) Because otherwise that debt forgiveness would be income. And so that law is really important to facilitating short sales at all. Otherwise, you're like, I'm gonna have a $50,000 tax bill at the end of this great, you know, then I'll just have somebody else chasing I'll have the federal government chasing my ass instead of chase Manhattan, like, I'll take the bank, you know, Rebecca Ravera (40:20) Right. Right. Craig Fuhr (40:33) Right. Rebecca Ravera (40:33) Right. Why not just let it go to four globes and then everybody can come after me and I'll file bankruptcy. It'll be a great day. So there's different ways around everything. And I always recommend that people get the answers they need before doing anything. Jack BeVier (40:39) Yeah. Craig Fuhr (40:40) Let's do it. Any other thoughts there Mr. Bevere? Jack BeVier (40:48) No, no, that's super interesting. mean, I'm, uh, I'm wondering, you know, if we're going to see more of this on a going forward basis, do you have a sense of that? I mean, like stats around like, you know, underwater mortgages. And I was surprised to hear you say that, uh, business was strong through 20 and 2021. Cause I would have thought that equity was so high that just the available properties, but I guess just the quantity of transaction activity was more important. And it seems like the quantity of transaction activity, like in past couple years until very recently was was like the headwind. Why do you think now like why do you think in 2025 things have picked up? Rebecca Ravera (41:27) I think there's a couple of reasons. People are out of money. They're maxed out on their credit. So God forbid anything happens like a roof leak, getting fired from your job, a death in the family. They have no money. They're out of money. Another thing I'm seeing is so many people did loan modifications through COVID when they put their home in forbearance. And so They'll call their bank Wells Fargo and Wells Fargo will give them a payoff for 200 grand. they're like, wait, I only owe 200 grand on my property. They'll go on the market with an agent. They'll get a contract. go to the title company and the title company is like, you have $120,000 silenced mortgage service by a totally different company. And they just don't know. People were not educated when they were getting these loan modifications from banks. did not know what they were signing up for. So now they're completely underwater with these partial claims. We're seeing a lot of reverse mortgage short sales as well because reverse mortgages, the way they're structured, I don't think you're supposed to ever be able to get out of them to be completely honest. There's so many interests and fees and everything on these reverse mortgages that I feel like you're underwater the minute that you sign on to one. So we're getting a ton of reverse mortgage short sales, but if you have them, they're fantastic. They only take about a month or two. Yeah, they're fun. Craig Fuhr (42:43) It's interesting. Well, listen, Rebecca, honestly, you're a wealth of knowledge. I don't think I've ever met anyone who's so knowledgeable on the subject. Why don't you tell folks how they can get in touch with you? Find where they can find you, how they can get in touch, and we'll be sure to post it as well for you. Rebecca Ravera (42:59) Yeah. So you can give us a call. Our number is 443-844-1446, or you can send me an email. It's rebecca, r-e-b-e-c-c-a, at reverahomesales.com. Anything you need, let us know. We usually always answer our phones. I have two people that are dedicated to that, so it's a big thing for us. And I think that I got so much of my knowledge because know, Greg was my first, Don't want to brag, don't want to brag. Craig Fuhr (43:27) Well, too, too kind. So, yeah, Jack, I just, you know, as I was doing some brief research, it's clear that there are 3030 leads literally in the last month, as opposed to an average of nine to 10 certainly speaks up in a week. Rebecca Ravera (43:45) In a week. Jack BeVier (43:46) Yeah, in that week. Yeah, yeah, in a week. Rebecca Ravera (43:47) In a week. Craig Fuhr (43:48) It's kind of crazy, man. So I would just for investors out there who have not dipped their foot in the pool of working with distressed homeowners with NODs, it may be a time to think about that. Jack BeVier (43:59) Dude, you know what? The student loan debt is about to, you know, the federal governments, all that forgiveness, those forgiveness programs are rolling off too. That'll be additional stress ⁓ on folks. Craig Fuhr (44:10) Yeah. I think you nailed it with folks, you know, rang their credit cards up to the moon. They had, there was obviously a home appreciation. A lot of people taking out the HELOCs on their houses, stuff like that. I just don't, the deals don't always pencil out, you know, frankly, but when they do, I've done, you know, I did a couple really, really juicy, short sale deals. If you can, if you can deal with the time. You have someone like Rebecca sort of working it behind the scenes for you so you can move on and make offers on other stuff. I think it's a great avenue for for deal leads and deal flow. So Rebecca, yeah. Rebecca Ravera (44:45) I will tell you, if it didn't pan out, we wouldn't be getting as many phone calls as we do. So if you're, if you come across a short sale situation, send it to me, give me a call. I'll walk you through it. I'll go over everything with you. I'm super happy to hold your hand on anything, even to do an initial call with the seller and, and ask the questions that you don't know to ask in the beginning so that you're educated on what to do the next time you come across these situations. But if it wasn't worth the squeeze, we wouldn't be getting the box. Craig Fuhr (45:17) You wouldn't have been doing it for 14 years either. Give folks the email address one more time. Rebecca Ravera (45:23) It's Rebecca, R-E-B-E-C-C-A at Rivera, R-A-V-E-R-A, home, H-O-M-E, sales, S-A-L-E-S dot com. Craig Fuhr (45:33) All right. Well, thanks for taking the time. Really appreciate it. Hope you guys enjoy this episode of Real Investor Radio with Craig Fehr and Jack Bevere. We'll see you on the next one. Rebecca Ravera (45:36) Thank you, Thank you.