Real Estate Articles » Short Sales

The Short Sale Process Simplified For The New Investor

By: Donte Aka GetSmart
Submitted: 11:53PM on Saturday 16 May 2009

If your niche is the short sale niche, then there are multiple ways you can make a profit from your deals. Most investors don’t want to deal with and for the sake of this article you have a lead generation system that brings in leads that you can’t work with. Those leads are short sales.

Short sale leads are homeowners that are facing foreclosure and need to sell their house fast to stop foreclosure while getting the lender to agree to reduce the amount owed for a faster sell.

Once you get your leads the process is simple. You will want to make a checklist of the items needed so you can get familiar with the process and not screw up like most newbies do. Your checklist should have a few items like; have you run the numbers, does the house fit your purchase criteria, documents needed to start the short sale process, the exit strategy for your newly acquired short sale.

After you get the paperwork needed which was requested by the lender then you can fax them over to the lender to get down to the negotiation process. You can request the paperwork needed from the lender simply by contacting them, but you will need an authorization the seller must sign first. The authorization can be as basic as “I homeowners give Buyer the right to speak to you on my account, if you have any questions all inquiries must be sent to buyer.,” then get them to sign it and put their loan number and the last four digits of their social security number.

Anytime you get a lead you have to know the most the house can be purchased for by you or one of your buyers. Make sure you have as much information as needed to make the buyer feel more comfortable with the deal. If the house has rats let your buyer know, for the right price rats won’t be a deal killer.

One of the documents the lender will need to proceed with a short sale is an offer, so it is important for you to start low then work your way up to your highest allowable offer. If the lender doesn’t counter then that means you are out of their range or you offered too much. You will also need proof of funds, because the lender doesn’t want to waste their time, you will also need to have prepared a settlement sheet to show the lender what they can expect to profit from the sell.

It is also important to know that some lenders will only discount the mortgage. Lenders will typically discount or reduce the mortgage balance 10-15% of the homes market value.

You should know that short sales can take on average of 3-6 months and don’t base your goal of receiving a check in the next 30 days on a short sale unless the deal is sweet for the lender.

In the mean time you want to start looking for buyers or financing to purchase your deal if you get the price you need. When the lender approves the sellers reduce mortgage request the deal usually has to close within 30 days. The point is to have a buyers list of investors to sell the house too. If you don’t have the financing or buyer lined up then don’t agree to the terms of the short sale. You can also buy time to find an investor buyer.

These points mentioned are just a few of the steps to successfully wholesale purchasing short sales.