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Show Summary
In this conversation, John Harcar interviews Bill McCarty, an expert in short sales, who shares his journey into real estate after facing significant personal and financial challenges. Bill discusses the intricacies of short sales, the common mistakes made by realtors and investors, and the importance of building relationships in the industry. He emphasizes the need for education and offers insights into evaluating properties for short sales, as well as his commitment to giving back to the real estate community through teaching and mentorship.
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Investor Fuel Show Transcript:
William McCarty (00:00)
because I know what they want and we get it all in there, it it just goes smoothly. It doesn’t mean it’s gonna happen faster even if it’s a great short sell package. So we submit it and they can sit on it, but some of the times the mortgage companies will sit on it till the last part of the quarter to close out for their books. So it’s not necessarily if you’d have everything in, but it’s also when are they wanting to clear up their books from bad loans? And we’re fixing to get a lot of them.John Harcar (00:17)
Yeah.William McCarty (00:28)
foreclosures come.John Harcar (02:08)
All right. Hey guys, welcome back to our show. I’m your host John Harcar and I’m here today with Bill McCarty. And what we’re going to talk with Bill a little bit about is besides his background, right? How he got into real estate, you know, what really brought him to today is his expertise in short sales, right? You know, we had a conversation prior to getting on here and guys are leaving a lot of money on the table, not knowing about short sales. So Bill, welcome to the show.William McCarty (02:25)
part of the campaign.Well, thank you for having me. I appreciate it.
John Harcar (02:34)
Yeah, I’m excited to to learn about that. I, I self admittedly aren’t the most knowledgeable short sales. I probably left a lot of money on the table, but before we get into all that, before we dive into the weeds, kind of give our audience a little background, you know, what, what brought you to today, how you got into real estate, et cetera.William McCarty (02:50)
Well, well, actually, I lost everything when I was 40 and, you know, I, I, I left the corporate world, did a self storage venture, you know, and it didn’t pan out the way I wanted to. And I just kind of like took a year off. I wanted to find out what was, you know, and the grind that I left, had a business and I was working for a salvage company and I was working 65 hours a week and plus the, personal business.And I just wanted something that I didn’t have to babysit guys. I was an electrical contractor in early 80s and throughout the 80s and knew what that had and tell them like I needed something. If it screwed up, it was on me. Like nobody outside control, no partners or anything else. And I just, read Rich Dad Poor Dad like probably millions of other people did. And it piqued my interest. And then when I realized that real estate
is the only asset that you can buy below market value, add value and bank’s loan 100%. It just clicked. And then I just went into a local real group where I was living, Jack’s Ria, matter of fact, very supportive organization and loved it. Just went in there, went through their quick start program about six months. I didn’t want to screw up anything. So, and you know, after
leaving that corporate position and everything else, I also lost six figures in the stock market. So, you know, being a little hungry, that eats into your your plans real quickly. So to me, I was eager to go out there, prove myself, you know, to take my legs, get over there, get started, get involved. That I remember going through that quick start course with Jack Schria, six months, I put an ad in the paper before the internet really took off.
And I got a call, I was scared to go over there at 40 still didn’t know what to expect. Went over there, made an offer. I still remember the offer was 42,000 and I put 10 or 15, maybe 20 into it. And then I sold it and made $17,000 and I got in about 60 days and I’m like, well, I didn’t screw that up. So let me keep trying this again. And I do another deal. And then I started investing my education and
John Harcar (04:40)
Yep.William McCarty (05:06)
I probably got $50,000 or plus in going to different seminars and boot camps to get to the next level. And it’s paid off tenfold.John Harcar (05:11)
Mm-hmm.Nice. You took my thunder a little bit. usually like to ask people, how did you get into real estate? Was it somebody that, or or if you look in the past, like, did you have an influence? Did you have something you, you rich, dad poor dad, you were the purple book guy. A lot of people are that way, which is great. So getting into real estate, right? Obviously you’re learning, you’re growing. Now you’re starting to do deals. What were some of the immediate challenges that you faced when you
started consistently getting things rolling.
William McCarty (06:31)
Well, keeping uh track of the deals, obviously, I pulled back from, you know, when I went to a seminar in a boot camp and the guy was talking about short sells and subject to they were combined together on the pre foreclosure market. And he said that there’s hardly any competition at the time. This is 2002, 2003. And it just rang. It’s like, okay, I’m going to go where nobody else is going.So when I got into it and understood it, it’s a long process. I’m going to grant you that, but I get my deepest discount on wholesale deals if I want to keep them or sell them to another investor. And the challenges were, you know, I was going out there, I was miles on the road, you know, working out of your car, truck, and then coming back and getting on online or at the time, you you didn’t have the automated systems that we have now.
John Harcar (07:25)
Right.William McCarty (07:25)
availableto everybody. So you just had to kind of pencil it in, you know, like Brent Daniels or whatever. He just carried a folder that had all the files in it. And that’s kind of basically how I did it. And then I did my first short sale and that was probably the hardest short sale I ever did in my life because it had five liens on there and it had a total of, uh I think I negotiated $47,000 down.
John Harcar (07:34)
Hmm?⁓ man.
William McCarty (07:51)
to 2500. Now it took me eight months to do it. The property was in bankruptcy. And so they couldn’t do it. The property was in Florida. So they have a longer uh foreclosure period. And then I once the first mortgage company took a $7,000 dip, then you know, hit, then all the other ones knew that they were going to get they weren’t going to get anything at foreclosure. So it was easy to negotiate it. And I got them all to agree to a certain amount andnegotiated and then had to deal with the title company. They didn’t help me out any and I had to learn them own about how to deal with the title company, what they needed and everything else. So it was a major school, the first one. I said, and then when I had a buyer for it, when we finally got all the title cured letters of acceptance in, I wholesale it to a friend of mine that bought it and I made $20,000. And I’m like, well,
It can’t get any worse than this one.
John Harcar (08:53)
Right? That’s kind of like that’s hairy to start.William McCarty (08:56)
Right?And it’s like, I just stayed consistent. And the thing about short sales, you know, the average one takes anywhere from three to six months, but you can, you have, you’re in control of the whole deal and you want to work with a realtor that gets it. And if you can do that and can, and realtors bring me the deals because that’s the thing is, is that realtors are starting to learn about subject twos and, but they’re not.
too familiar with short sales. So I go and teach the course that I have and it’s a one, I could do a regular two day seminar, but I mean, for realtors to help them understand that they’re sitting on a deal where they could possibly get 6 % on it as now, at least in Texas, you have to have a buyer’s rep. So with the buyer’s representation, you have to sign an agreement to be the buyer’s rep.
as well as the listing realtor so she can get both sides of, or he can get both sides of the commission and working with them, I teach them, walk them through the process of submitting a short sale package of what’s all in that. And then you sit back and then you have some other steps that I teach that you meet with the appraiser. And when you do that, that’s where that’s where the short sales won or lost.
And so when you meet with the appraiser, you get it negotiated, then it goes back to the lender and then the lender sends it to underwriting. And then if they either accept it or if it’s a FHA or VA or yeah, FHA is 88 % of the appraised value. VA VA is uh 92%. But you usually have, it’s all subjective. So the value that you have and that you’re negotiating is going to be obviously lower.
And you want and you want uh communicate all the repairs. You do a repair estimate and all that. it’s a system that I’ve put together over the last 25 years. I know what the banks want. So you’re not having to go back and forth and getting them documents. And you have it all in a short sale package the first time and they go in there and look at it. And, you know, in fact, I had one letter make a remark to my realtor I was working with is that this is the best short sale package he’s ever seen. And I’m like,
John Harcar (11:52)
Hmm.William McCarty (11:54)
because I know what they want and we get it all in there, it it just goes smoothly. It doesn’t mean it’s gonna happen faster even if it’s a great short sell package. So we submit it and they can sit on it, but some of the times the mortgage companies will sit on it till the last part of the quarter to close out for their books. So it’s not necessarily if you’d have everything in, but it’s also when are they wanting to clear up their books from bad loans? And we’re fixing to get a lot of them.John Harcar (12:13)
Yeah.William McCarty (12:24)
foreclosures come.John Harcar (12:25)
Yeah, it’s gonna happen. That’s gonna happen a lot here coming up. ⁓ Why do you think it’s because it’s more of a timely, more involved, more you know longer process is why a lot of investors don’t pursue that type of exit.William McCarty (12:39)
I don’t think it’s that I think it’s they just don’t know how to do it I think that’s the biggest deterrent is now being a six month deal I like it’s like the old crockpots you put you put The food and the roast in a crock pot and you turn it on and you let it sit and you let it cook Well, what I do is I’m following up with the mortgage company once or twice a week Where are we let them know that I’m in and then? ⁓I can’t help how long it’s going to take to go to underwriting. Every lender is going to be different. But it’s not like you don’t have a deal. mean, once you get through the first part of it, then you’re just waiting for them to make a decision. Now that being said, you’re still doing your day-to-day business. It’s not going to stop you. I mean, you can put a short sell patch together and do it right and everything like that in a few hours and submit it. And then the only thing you’re waiting on is to meet with the
John Harcar (13:24)
Yeah.William McCarty (13:35)
appraiser, you should be doing other deals. I mean, you know, and, and the good thing about what I’m going to develop is the course that people can teach short sales. If they’ve done one or walking through it, I’ll coach them. But I just want to help people get to, you know, what I’ve enjoyed over the years, success in there. And I am going to be put in on my, on my YouTube channel. I’ve got the receipts, you know, the, the closing statements and everything else.John Harcar (13:39)
yeah.William McCarty (14:04)
And it’s just something that’s not taught, but I think every realtor that goes and wants to go to the next level needs to learn every strategy they can.John Harcar (14:13)
So walk me through this, right? Walk me through deciding that this property is good for a short sale.William McCarty (14:19)
Okay, let’s say we walk into a property. It’s either been on the market or whatever and they they have owe, well, let me give you an example. I’m trying to think which one I like right now. Well, I’ve got a property that’s worth 300,000. I’ve got a buyer that’s already won it. And the house is a divorced couple.husband just left, the wife couldn’t take care of it, financially couldn’t take care of it, put it on the market and it was too messed up. And I think They owed about 250, 260. Okay So, but the house is worth 3, 320. That’s a perfect number, 15 to 20 % equity in it gives you a little bit more room because it’s a lot easier to get a mortgage company come down 30 % than it is 50%.
So then I go in there and I put a work, you my repair estimates are going to be everything and anything that could be possible with a house. So, you know, if it’s something that people think it’s $40,000, my repair estimates 70. Okay. Because two things I tell people and I tell the realtors and the appraisers, you don’t know what’s behind the wall. You don’t know what’s going on. You haven’t done enough houseless to realize.
John Harcar (15:24)
Right.Exactly. You don’t know the unforeseen.
Yeah, you don’t know the unforeseen.
William McCarty (15:39)
But the other thing is, that you can, so that house, and when I teach the class and I’ll teach investors and realtors that we want to take the low comps. You’re not going to use a house that’s been rehabbed as a base value. You’re going to use a house that’s been sold as is. So that gives you a low comp. Then you take the square footage of the house and then you subtract the repair estimates. And then you’ve got yourbase price of what the house should comp in at. And so with this particular house, they owe the the 3, 250, I’ve got hundred $86,000 of repairs. So out of that, you deduct that and I’m getting low comps at the 270-ish, 280, and they owe 250. So those numbers, you got to still about $30, $40,000 spread there.
And so if I get the appraiser to look at the 270 and take my $86,000 repair estimate or whatever, and I get it appraised for 180, then it’s going to be 88 % of 180 or 200. 88 % of 200 is 176, approximately 176, and I’ve got a buyer for 200.
John Harcar (16:55)
Yeah.Yeah, no, that’s awesome. That’s awesome. So what do you think some of the biggest mistakes are that guys are doing when they’re going, they’re starting to try to do for short sales?
William McCarty (17:13)
Well, the biggest mistakes that realtors make is listing the property too much and or listing the house, you know, because they want to get paid and the realtors will list it for what’s owed on the house. And it’s still not worth what it’s worth as is condition. You know, they’re trying to do it. So, you know, what I tell the realtors to do, if I get the realtors who communicate with me,John Harcar (17:31)
Right?William McCarty (17:40)
is first before they list the house, then I get them to list it for a lot lower as is price, then the mortgage company sees it. I’m telling the investor community as well as you as far as when you’re working with a realtor. And now for investors, the biggest mistake is not taking action. Getting with a realtor, asking a realtor, is there a house out there that’sneeds a lot of work and it’s not selling and they’re just sitting on it and they’re just letting it go to foreclosure. I mean, they don’t know what to do. So I would say, cause most of the realtors are in, been in the market for more than 10 years. Now I’ll say, right. I mean seven and they got into it when everybody was making money and that’s all good and well. With this business and strategy can be done anywhere in the country. And once they’ve learned how to do it.
John Harcar (18:19)
A lot less than that.William McCarty (18:34)
then they can go out there and teach the class. And then they get their leads from the realtors. And it’s it’s a system that I put in that anybody can do. And I love it. I I enjoy working with realtors and they appreciate you. and then, you know, I don’t know if you have a big sub two sub two community, but it’s a great way for them to bring you the sub two deals that they don’t know how to do. I’ve had, I’ve closed four deals, made $10,000 on each one.when they brought me a sub two and I was able to pay them their 6 % or maybe part of the wholesale fee and they were happy and everybody got taken care of. So you get a lot of leads from teaching a short sell class and you make a lot of relationships and that’s what it’s all about is being able to be somebody that can solve problems.
John Harcar (19:18)
Yeah, I love it.I love it. I love it. I love all the information you dropped today, man You’re right. Not many people know about the whole short sale thing. So if there’s some folks out here that are listening to this that they want to reach out, they want to maybe talk to you and learn more about the short sale stuff, how do they best get in touch with you?
William McCarty (19:38)
Well, they can they can email ⁓ me at bill @ proactionproperties.com. They can drop, check me out, William McCarty on Facebook. I just reply to everybody you know whenever I can. I mean I’m out on the road, so I can’t, I’m not like one of these kids that go out there and look at their phone all day. So,John Harcar (19:58)
Yeah.William McCarty (20:41)
And they could just better to email me so that I can connect with them you know directly and I can set up a time to talk to them if they have questions or they want to participate or whatever.I’ve been doing this a long, you know, one of the things that I’ve learned when I first got into it, it was a competitive thing. But when you get older, it’s about giving back to the younger people or anybody. You know, if somebody was retired and they want to do something, they can jump into this. It’s not age specific, but it’s about giving back. I’ve been fortunate and I want to bless other people.
John Harcar (21:17)
I love it. love it. Well, I, and he blessed our audience guys. hope you really enjoyed this conversation. Hope you picked up a lot of things. you know, Bill, thank you again for coming on and sharing all your knowledge and guys, I hope you enjoyed it. We’ll see you on the next one. Cheers. Of course.William McCarty (21:32)
Can I add one more thing? Can I say one more thing?I’m building a short sell channel on YouTube. So it’s Mr. Short Sale. I had an investor who’s kind of smart alecky and he called me, why aren’t you Mr. Short Sale? And I said, okay, I’ll just do that. So I got that name and I started a Mr. Short Sell channel and I’m just uploading stuff as I can, as fast as I can to walk people through it.
John Harcar (22:00)
Very cool.Guys, there’s a channel, go check it out. Go subscribe and follow. And Bill, once again, man, thank you for sharing all you did, okay?
William McCarty (22:11)
Thanks, John Appreciate it. Have a good day. You bet.John Harcar (22:12)
Thanks, guys.
