Phil Pustejovsky taught short sale real estate investing techniques during the real estate market crash. Starting in 2007, short sales became a very prevalent occurrence as real estate prices began to plummet below the amount many homeowners owed against their properties. A short sale is when a bank agrees to a payoff that is less than the full mortgage balance. Banks agree to short sales because it can actually save them money in the long run over having to foreclose on a property. To learn more about short sales and how they effect homeowners, check out a website Phil built to answer the most commonly held questions about short sales, ShortSaleTeaching.com.
The golden years of short sale investing occurred from 2007 to 2010. Short sales were in their infancy and the lack of competition coupled with the lack of knowledge allowed a select few to make a fortune. Phil trained hundreds of investors on the art of making big money with short sales. During those golden years, banks were reasonable and greed had taken a back seat to simply making intelligent financial decisions.
However, short sale investing profitability began to decline precipitously in 2011. First, real estate agents began to focus on acquiring short sale listings and this created much more competition. Unfortunately for homeowners and real estate agents, the problem with the traditional approach to selling a house with an agent when applied to a short sale, is that banks will not move forward with considering a short sale unless an offer has been made. So many short sales got stuck in limbo for months as real estate agents and homeowners waited for offers. Meanwhile, investors taught by Phil were an ideal solution for homeowners who needed a short sale because there was no waiting around for an offer. The offer was being made immediately by the investor which sped up the short sale process. And in a declining market, the longer you wait to sell, the less you can sell it for, so investors were ideal for short sales.
Rather than embrace investors though, greed began to set in with the banks and they looked upon investors as making too much money (although after a longer time to find a buyer which reduced the end sales price due to a declining market, commissions, etc, it was shown that investors actually saved the banks money). Starting in about 2011, banks began to do everything they could to eliminate investors from buying short sales. They tried to demand deed restrictions be added to the title to properties to prevent investors from re-selling quickly, but legal cases brought against the banks stopped them from being able to enforce such a plan because it was illegal for previous lien holders to restrict what a new buyer could do with their property once they owned it. Previously, banks had tried to cut agents out of short sales to save money on closing costs but soon they began requiring real estate agents to be involved in all short sale transactions (no doubt the result of hard work by National Association of Realtors lobbyists in Washington). This created added expenses and slowed down an investor from getting more short sale deals done. Eventually, the banks had to back off of their deed restriction demands and instead, simply require all parties (buyer, seller, agents, closing company) sign an affidavit which spells out that the new buyer can’t resell the property for a specified number of days, usually 90 days. Nowadays, short sales are dominated by real estate agents and many short sales no longer have the profit potential that they used to.
As the short sale business matured, Phil spent less and less time training investors on short sales and adjusted his trainings to more profitable approaches that fit the current climate. But Phil’s mark on short sale investing education remains. He made a very big impact on investors all across the US who embarked on short sale investing. Does Phil Pustejovsky do short sales today? He has a few of those deals in the works but he says he cherry picks for just the best ones these days. He assigns the rest to agents and other investors who want to do a ton of work for very little upside. That’s how Phil Pustejovsky is connected to the phrase short sale.