Homes with no equity are hard to market and often end up foreclosed. In today’s episode, Brent Daniels is joined by “The Queen of Short Sales,” Nicole Espinosa. Nicole talks about how she got started in the real estate industry and has quickly become the authority on all things short sales.
A licensed realtor, Nicole is super proficient in very complex real estate transactions. She breaks down her process step by step for dealing with short sales and why this is one of the most overlooked (and profitable) niches in real estate (the riches are in the niches).
Nicole shares all of her tips, tactics and, strategies for making a fortune in short sales quickly. If you want to learn more about short sales or have been thinking about how to bring this profitable real estate niche into your business, this episode is a must-listen!
Expert Interview – How To Earn Massive Profits From Homes With NO Equity With Nicole Espinosa
On today’s episode, Brent Daniels is joined by “The Queen of Short Sales,” Nicole Espinosa. Nicole talks about how she got started in the real estate industry and has quickly become the authority on all things short sales.
This show is a long time in the making. This one is going to blow your mind because this show is going to show you step-by-step some solutions that you can implement in your business when you run across property owners that don’t have equity or don’t have a lot of equity. That is why I brought on the nation’s Short Sale Queen. Nicole Espinosa from Dallas, Texas is here on this show. I am thrilled. Say hello to everybody, Nicole.
Thank you so much. I’m so happy to be here.
I’m happy that you’re on here. Nicole has done over 3,000 short sales. She is in thirteen markets that she’s majorly in, but if the deal and situation are right, she can do this nationwide. We’re going to open this up because this is an incredible resource for everybody that is wholesaling real estate. You’re probably wondering what is short sales have to do with wholesaling. Nicole is going to explain it and educate us right here so that we can squeeze out an opportunity from every single lead that we come across. Nicole, first of all, we are going to get in the DeLorean. We’re going to time travel. We’re going to go back. When you first started in your real estate journey, how old were you? What was going on? Who were you at that time?
I was 21 and I had moved to Texas. I’m originally from Florida. My first experience exposure to real estate was in the REO market. I was doing foreclosures and working with asset managers. It was in 2008 where the prime of the REOs hit the market. The first exposure I had was this completely different experience than most real estate agents or most people in the industry have. I was learning the nuts and bolts of it. At that time, we were getting 100 to 125 listings a month, so I was managing new assignments. The brokerage that I was working with did it at a high volume.
When you say assignments, you’re going to make wholesale people go, “Assignment like assignment fees?” Nicole is talking about REOs that stands for Real Estate Owned. In 2008, 2009 and 2010, people were losing properties to foreclosure. They go back to the bank into their REO department. That means that the bank owns those properties. When they do, they assign these properties to be sold on the open market to certain real estate agents that have an account with them. I assume you were a part of a team in one of those brokerages.
The brokerage had a lot of relationships with different asset managers that worked for the bank that would give us those listings. We had to manage it from evicting the homeowners down to getting it listed. I saw how it works behind the scenes. It’s the worst I’ve ever had. It was heartbreaking because I had to see people get evicted with their families and all of that. People don’t understand the psychology of it. Back then, there was no process to help people before that point. It was craziness. If you’ve been in the industry for a while, you’ll know that majority of the market was filled with foreclosures and there wasn’t that much information about short sales, which is what we’ll get into.
I had left that job. I had my license and got into my first listing as a traditional agent and it was a short sale. It was one of those things where I’m like, “I can figure this out,” because I already have this background of working with these lenders. I did my first short sale and I started developing the process that we utilize now. Fast forward several years later, it’s what we do with the banks. We were doing it when the banks weren’t fully establishing their processes. We’re learning with the banks as they were setting that up and short sales became more prominent.
Salespeople love the hustle and grind. It’s that drive that makes them great.
It’s interesting, Nicole. It’s like you’re taking me down memory lane because at that time, I owned a brokerage in 2008 and we had started to do short sales. We had 300 ready to go. It was unbelievable. There were no departments. There was nobody to talk to. We didn’t know what to do. A lot has changed, which is phenomenal. It’s exciting now that you can find an opportunity but let’s make it simple here. What is a short sale? How does this wholesaling, rhino tribe, and all these wholesalers that are reading, use short sales to our benefit?
A short sell is where a homeowner has some type of financial hardship where they can’t afford the mortgage anymore. In order to sell, they would have to bring money to closing that they don’t have. What we do is we go to their bank and we negotiate for the bank to take the loss instead of the homeowner. It allows the homeowner to be able to sell the home without owning anything and walking away free and clear from their debt. They’re getting to avoid foreclosure and they’re walking away with settled debt. How it plays with wholesalers and investors is as investors and especially a lot of new investors, you’re taught to go after properties with high equity.
What people don’t understand is there is an opportunity for properties that don’t have equity. If the numbers do not make sense, most investors are like, “Throw away the lead, let’s move forward.” Instead of doing that, the homeowner still needs help. You have an opportunity to be able to not only help these people but an opportunity to buy a house at a discount where normally you wouldn’t be able to because you’d be buying it through the bank instead of the homeowner directly.
For simple math, if somebody owes $150,000 and their property is worth $155,000, they don’t have enough equity in there to pay a real estate agent, pay the title and escrow fees, and be able to get that done. They have a hardship with the pandemic and anything with that or it’s a financial hardship. They lost a job or they can’t afford it anymore. It’s not necessarily only people in foreclosure.
They don’t have to be in foreclosure. They just have to have a hardship. Now, with the CFPB, which is the Consumer Financial Protection Bureau, what they’re proposing for people that have a financial hardship due to COVID is that COVID isn’t a permanent hardship. All you have to say is, “I was affected by COVID,” and they have to approve assistance.
I’m an investor. Let’s say I’ve got a deal here in Phoenix. They owe $300,000 and I want to buy this thing for $270,000 to make sense. They’ve got a hardship. Do I bring my offer to somebody at the bank and say, “Would you consider this? They’ve got a hardship. This is what I can pay for it. Will you accept it?”
You would need an agent to be involved in the process because you’re the buyer, you can’t negotiate on behalf of the homeowner. The homeowner has to have representation. You would work with someone like me and my company where we would submit and negotiate your offer with the bank into people who could provide. It’s not as simple as saying, “We have a hardship.” There are a lot of documents involved and a lot of proof with their financials that we collect. We take care of the whole process. What we do is we go to bat. There are two parts to getting it approved. One is the financial hardship and then your offer by getting an appraisal by the bank. It’s going to be as is.
Let’s go with your scenario of $155,000 and $150,000. Not only is it closing costs, but you have to think about most of the time when someone’s behind on one thing, they’re generally behind on more than one thing, on everything else. A lot of times, we see second liens, HOAs, taxes and judgments. A lot of times the houses are not in the best shape. Where we get the biggest discount is by getting repair bids and working with the investor to try and get that price down as low as possible.
This is a little bit different from traditional wholesale. When I submit that offer to you, you get that offer accepted by the bank, I have to close that. I can’t just assign my interest for more on that deal.
You can wholesale it in the sense where you can do a double close so you can get transactional funding where you can do the same day. You’re right. The person that puts the offer in, you can’t assign it and then assign the contract. You can’t do a double close where you close on the front end and give it to the back-end buyer.
They don’t put any flip contingencies that you have to own it for a certain amount of time. Is that bank-by-bank? What does that look like?
It’s completely bank-by-bank. We saw a lot of deed restrictions, which is what you’re talking about, that doesn’t allow resale. We’re not seeing as much of that anymore in the last couple of years. The biggest or the most often that we see it as generally with Freddie Mac loans. The FHA and conventional, we’re not seeing those.
That is huge. For everybody reading, back in the day, if it was a short sale, if you were the buyer on that short sale, they would make you have that property for a minimum of 90 days before you can resell it to anybody. Some of them had deed restrictions where you could only sell it a certain amount of times within a certain timeframe. You could only sell it to three different owners in twelve months or something like that.
They don’t do that anymore. You have to remember too that because time has evolved, they want to protect to make sure that they’re not getting screwed over. They want to make sure that they are getting the highest for the property. Through the day, if the house needs to be discounted for repairs, it’s not going to finance. It’s going to sell to an investor. Even if they foreclose, they would have to sell it at a discount, so why not go through the short sale? A lot of times, the deed restrictions come up if the bank is taking a significant loss. We’ve seen that happen if the bank is taking hundreds of thousands of dollars of loss where they’re like, “If we’re going to take this loss, we want to make sure that it’s not warranted.”
Are the people you’re spending time and having conversations with helping you grow?
To simplify this, if you’ve got a property that doesn’t have a lot of equity but it needs a lot of work, for whatever reason, maybe they got a home equity line and pulled out their equity, maybe they refinance or did something where they don’t have a lot of equity, the best deals for us wholesalers from a traditional wholesale standpoint are probably properties that need an as-is appraisal. It’s not effective to think that we can go into a property that’s beautiful, totally redone, and has fifteen comps in this master plan community. All of a sudden, this house should appraise at $500,000 but we’re putting in an offer at $300,000. That’s not going to fly.
Not every lead is going to work out because of what you’re saying because there is going to be some pretty properties that don’t warrant the deep discount but we do pay for the leads. If you’re not purchasing it or you don’t have the ability to, we pay 25% of whatever we make. You’re still getting compensated. Here’s the thing. Direct marketing is expensive. If you can find a way to have a solution for every single lead, your cost per lead is going to go down significantly, which is important. How hard is it to get the right lead if someone is on the phone, find a motivated seller and not be able to do anything with it? Those solutions are going to help tremendously.
Either way, if we’re coming from the standpoint of serving our community, what is the best way to avoid somebody getting kicked out of their property? If it’s a short sale, they know when they have to be out and what’s going on. There’s no mystery there. It’s not some weird auction situation that happens and then all of a sudden, it doesn’t happen and the auction gets postponed. They don’t know if they own the house or if they don’t own the house. The uncertainty is taken care of because you know when the short sale is going to close. I’m thinking and I wrote down my notes here, you’ve helped 3,000 homeowners, families and people in the community avoid probably one of the most embarrassing social events of all time. Getting kicked out of a house that you owned in front of people that you know. How do you feel about that? You got to feel outstanding.
It’s so rewarding not only being able to help them in this situation, but also being able to help them press the reset button, because not only do they get out of this debt-free because we’re settling everything, but they’re going to be able to purchase in the next 2 to 3 years. A lot of times, what we do is we tell them, “This is your chance to get everything right and then get into a new mortgage where you’re in positive equity.” The idea of homeownership is to build equity. You’ll be out of this bad situation, bad memories and being able to start over. We have the best clients. We’re working at the very end. We have so many reviews from people that are so grateful because it’s not easy. If it’s easy, everybody would do it.
I’ve done it. It’s so much work. If you’re doing it on your own for the first time, get ready for the longest learning experience of all time. I suggest anybody that has focused on their wholesaling business, finding deals, doing flips and doing these things, do not negotiate these yourself. Go with the pro like Nicole. It’s way too much work. The learning curve is so high. It’s a lot of fist fighting, brain damage, and it’s not worth it in the end. You should be going after some better opportunities.
What Nicole is saying is if you go into a situation with a lead and they’re telling you that they’re in some form of distress, and they have a problem but they don’t have equity, and the property is in rough condition, the solution that should be ringing in your head is for them to do a short sale. If you refer them over to Nicole’s company, then they take it from there. I assume you will reach out to these owners and then walk them through the process and educate them. Not only that, just so that your sellers, your leads will answer that phone call when Nicole’s company calls, you got to let them know the difference between what happens to your credit score and your credit report if you foreclose on that property versus if you do a short sale. It’s the difference between 2 years to 3 years versus 7. Am I right?
Yes, 7 to 10 whenever they report it. Not only that, you’re leaving yourself open to liability if you go through foreclosure because you still have the debt, that deficiency, which is the difference between what they sold it for and what you owed. You can get taxed. You can get 1099 for that difference as well. There are a lot of benefits to doing the short sell and we make it super easy. If you’re referring it over, you go to our website, TheSSQueen.com and we get instantly notified of the lead. We call within 10 to 15 minutes and we connect with you. What people love about our system is that we give weekly updates. You’re going to know every step of the way what’s going on, which is huge because so many people work so hard to get referrals but do nothing to keep it. We’re 100% referrals. We want to make sure everybody is on the same page and they know that we’re on top of it.
This is just another resource. These deals aren’t going to come up all the time but when they come up, there should be an option for every lead that you have. If you run across somebody that is a distressed property owner, there is something that you can do every single time. I’m telling you, Nicole and I’m speaking to the audience as well, if you’re reading this, make sure that you go to Brent Daniels YouTube channel to put a face with a voice. I want it as hands-off for me as possible. If I’m going to look for a different solution, whether it be creative finance, subject to, wholesaling, flip or whatever else, I know that my bread and butter is wholesaling. This is what’s paying the bills, the cash machine and the ATM.
I’m going to focus my mental abilities and attention on that. I need somebody that I can pass these things off to, not have to think about and get passive income. It is essentially what happens unless you negotiate. I’m the buyer and you negotiate, I’m able to buy that and flip that property or double escrow it, then that’s going to stay in my wheelhouse. If it’s something that maybe it’s a little bit too tight, it doesn’t fit, and I give it over there, now I get a referral fee and life is good. There are two different ways to add income to my business bottom line by reaching out to TheSSQueen.com. It’s a phenomenal resource for the Rhino Tribe here. Guys and gals, if you’re running into any of those situations, reach out. Nicole, you get a real estate license. Who are you? You go off and do 3,000 deals. Inside of you, internally, what told you that you could do this?
Honestly, it was an evolution. Everything else evolves who I was as a person and who I had to step up as a leader in my organization. I wrote a book on how to master short sales, and I could write a whole other book on how to fail forward because I have made every mistake possible. Even though it was very painful and I was broken more times than I feel like I made money through learning all of this, it developed who I needed to be and who I needed to show up as. I felt like in the beginning, I had something to prove because I was so young. There are not that many women in this industry that are running organizations like this. We know that in the real estate industry.
I remember it took so much for me to evolve a lot of work on myself as like, “I know I can do this. I have to figure out how.” I’ve rebuilt my company twice. That second time, I fired everybody at once and I was like, “I am either going to do this or I’m not. I’m all in or I’m out.” It’s crazy because they don’t teach you how much you need to work on yourself to be able to have a successful business. Your perspective, mindset, and the way that you show up every day are the results that you’re going to get. People don’t get that because mindset is thrown around so much in this industry and entrepreneurship. What people don’t understand is it is the difference between you keep failing forward or you quit.
It takes somebody that’s almost insane to keep going, despite being broke and failing. Especially with something that I do with short sales, there was no resource. It’s not like I could have had a mentor or coach. People have so much great resources for wholesaling like watching your stuff and being coached by you. With short sales, there wasn’t anything because no one was able to figure it out or establish. The people that did, didn’t want to share. Having to learn the hard way was very painful. Finally getting to a point in my journey where I had to humble myself and I was like, “I need to network with people that are much smarter than me because if I’m going to build out this organization, I don’t know what I don’t know.”
That’s what I did. I was a part of masterminds. I read Scaling Up, which was the reason why I fired everyone at once. It’s a phenomenal book. It said this one key thing, “If you had to rehire everyone in your organization, would you? Look at each position.” I was like, “I wouldn’t.” I realized I need to hire intentionally. As a leader, I have to know what position is important in my organization and what that looks like. It was a journey, having to show up as that person and then getting past the stigmas of, “You’re a woman and young, this and that.” Over the last several years, it’s been that growth. It turned into having this following of people that are like, “She’s doing it. I can do it. You’re inspiring me by being honest and authentic with your journey.”
I would post on social media like, “Not everything is perfect. This is what’s going on. I lost money here. I did this but I kept moving forward.” For me, that’s what moved me forward because I realized it was so much bigger than me. Now, my why kept evolving. At first, it was my children, then it was something to prove, and now it’s the people in my organizations, the clients we serve, and the community that we’re consistently outreaching to.
Mindset is literally the difference between you keep failing forward or quitting.
You’re hanging around amazing people. That’s the external part. The internal part, you have that drive. You knew that you had the capacity for greatness for doing something special and you had that motor. We’re a small group. Anybody that’s reading has that. Feeling it, seeing it and giving real-life examples. We need that. You’re showing that and I love that, but who do you surround yourself with? How do you stay sharp? You’ve been so successful. It’s Rocky III, you buy a robot, you get lazy and get knocked out. How do you keep the fire alive and keep the passion going?
Honestly, it’s constantly learning and finding things that excite me. Going through from salesperson to CEO to full-on entrepreneur, I was used to day-to-day. We are salespeople. We love the hustle and the grind. That’s what makes us great. It’s that drive. When I got out of production, I was like, “What do I do now? I’m so used to hustling and working 80 hours a week.” I bought my time back. Going into that phase, it was almost like I was depressed for a little bit because that was my motivation every morning waking up. What I learned in this phase of my life now is my time is everything.
The people that I’m spending it with and the conversations that I’m having, is it helping me grow my mindset or the things that I’m listening to and sparking ideas for my growth? I’m constantly trying to learn new things and perfect our processes. That gets me excited. My mentorship gets me excited. Right now, I’m blessed to be in a position where I can focus on whatever I want. My business is running like a well-oiled machine and now it’s a matter of overseeing it and doing things that I’m passionate about.
How do we get ahold of you? How do we say that we’ve got an opportunity? I know that we’ve got the website. Is there somebody that they can reach out to? Can we get a little bit past the gatekeeper, which is the website? Can we get a little bit of bonus here for everybody reading?
You can call us directly. I can give the number, it’s (972) 832-2621. There’s always someone that’s going to answer. We always say use us as a resource. Even if you just want to have a conversation about a deal that’s not involved with us, we have no problem helping.
If people want to tell you that you’re great or reach out to or say, “I’m in Dallas,” or whatever, what’s the best way to reach out to you? Is it Instagram or email?
Nicole, thank you so much. It gives us another tool to be able to use in our wholesaling business to not only get some deals at a discount that were too tight before, but also to help out these people that nobody wants to help them out. They’re getting left behind and also to be able to get a potential referral fee from that. It’s a win-win all the way across. Thank you for being on here. You are amazing. Nicole has an incredible, perfect reputation among the top companies around the country. Everybody is using her company to do their short sale. Thank you so much, Nicole.
For everybody out there that is interested in joining the most proactive group in real estate investing, it is the TTP family. The TTP Program. Go to WholesalingInc.com/TTP. Scroll down, check out what it’s all about. Check out all the testimonials. If it feels good in your gut, sign up for a strategy call. I look forward to working with you personally. Nicole, you’re the best. Everybody out there, I love you. I encourage you as always to go out there and talk to people.
- Short Sale Queen
- Brent Daniels – YouTube Channel
- Scaling Up
- @TheNicoleEspinosa – Instagram
- The Short Sale Queen – YouTube Channel
About Nicole Espinosa
Nicole Espinosa, best-selling author of “Short Sales Uncensored” is the leading short sale expert based in Dallas, TX.
Before Nicole did short sales she had a background as an REO manager, working with over 50 lenders.
Nicole has closed thousands of short sale transactions successfully and continues to process hundreds a month for clients nationwide.
Nicole has been negotiating short sales in the DFW and Houston market since 2011 and launched her company “The Short Sale Queen” in 2019 allowing her team to process short sales nationwide.
Nicole has been featured on several real estate panels, podcasts, and TV segments. She also teaches classes on short sales to other brokerages, title companies and realtor associations. Nicole’s extensive knowledge in distressed properties has made her the market expert when dealing with difficult transactions.
When she’s not working on real estate transactions, she is a mentor to her real estate team, and mom to her 2 adorable children, Elias and Emma.