Question about properties in the auction!!

[Gurdeep Walia]

Hi guys, I'm a new investor and this is my first post. I have a question about auctions. Is it possible to discuss a short sale with a lender after the property has been listed in the auction? 

Thanks in advance for the help. 

[Denise Evans]

I'm not familiar with time periods in California, so this answer is a guess. In Alabama, which also uses non-judicial foreclosures, you can often stop a foreclosure with a short sale offer submitted as late as one week before the scheduled auction date. Earlier is better, of course.

You will need an authorization letter from the borrower, allowing the lender to talk to you. Many lenders have their own forms, but you can start the process with almost anything you find on the Internet.

You should submit the estimated settlement sheet showing net proceeds to lender, with nothing to borrower. You need a copy of the earnest money check, a copy of the fully executed sales contract, and proof of funds. That means a bank statement or investment account statement showing availability of the down payment amount, or a letter from a banker or investment account manager saying those funds will be available. You will also need a lender commitment letter for the balance, unless the bank/investment account can support the entire purchase price. If so, that should be reflected in your paperwork.

To be safe, you should include a copy of the listing agreement, if there is one, and a copy of the MLS sheet. Not all lenders require this, but it's safest to send it if you are working against a deadline.

If at all possible to obtain the lender's short sale package, you should also have that completed. That will include financial information from the borrower, copies of tax returns, copies of last two pay stubs or other proof of income, a hardship statement, and arms' length affidavits.  You will probably also need to submit IRS Form 4506T.

The more documents you can get to the lender, as quickly as possible, the better your chances.