Short Sale Class Note
Hi everyone, I'm new to the BP, one week to be exact. Love to share something here as everyone else did.
I took a 3hr short sale class today in Long Island, NY. Just want to share some notes I took down and love to hear more about short sale strategy discussion.
*how to prepare
Required Documents for a short sale application
1. Authorization letter from seller
2. Hardship letter
3. Pay checks
4. Tax return 2 yrs
5. Short sale application
*As a realtor for the deal, ask bank for 6% commission (they don't always give you what you ask for)
*Example:
original mortgage $600,000
$400,000 offer for short sale
-$2000 attorney
-$264,000 commission 6%
-$2000 transfer tax
-$ x amount liens on the property
-$15,000 seller cash out money/relocation money (seller could get something from the deal depending on how you ask for the money. a lot of times seller walks away with nothing.)
-bank gets whatever left
*Prepare all the offers, letters, application and then submit them to the bank
*Bank receives the application and assigns it to certain person. You call the person to follow up the process.
*Inform all the buyers that it's a long process and may take 6 months to 1 year. No guarantee.
*when seller gets a 1099A ($200,000) after a short sale, ask cpa for insolvency form
*nowadays, you usually get $.85 on $1 from a short sale. If lower, bank would decline the application and rather go for auctions to get more money back.
I'm looking into one short sale deal myself. It will be my first investment property and I'd love to hear more about potential problems may occur during the process. The property I'm interested in is short sale for $270,000, which the ARV is around $360,000. I'm also thinking to put in around $60,000 for the rehab and then rent it out.