8 Steps To A Successful Short Sale In Real Estate Investing
It is important to know how to do a short sale for successful real estate investing
. In a market full of properties that are in default or facing foreclosure, negotiating with lenders is necessary to increase profits.
Follow these simple steps for a successful short sale.
1)Identify a short sale candidate
Some properties are good short sale candidates, others are not. To be a good deal, I consider a property that becomes profitable after only 10-20% of the mortgage has been discounted as a good short sale candidate if it has only 1 mortgage.
If there is more than 1 mortgage, you can get a 70-80% discount on the second mortgage. This creates enough equity for making profits.
A seller must be behind on their mortgage to qualify for a short sale.
2)Sign a Sale / Purchase Agreement
Next you need to sign a contract to buy the house. All lenders require to see this.
You must also sign an Authorization to Release Information form so the lender can discuss the mortgage with you. No lender will discuss a third party mortgage unless they have an Authorization to release.
A statement describing the seller's hardship must be presented to the lender. A hand-written one increases credibility with the lender.
3)Fax Authorization to Release Form
Call the lender and ask for the fax number to fax Authorization to Release Form.
Usually it takes 48 hours to register in their system.
4)Fax required paperwork
Once the Authorization to Release Form has registered in their system, call them and ask what they need to do a short sale.
Prepare this paperwork exactly as they need it. In most cases, you can find this information on the mortgage lender's website.
Fax all the paperwork as requested. It is important to be accurate as missing or inaccurate information can delay the short sale for months.
You will need to wait at least 48 hours as it registers in their system.
he short sale is then allocated to an underwriter who will see it through the end.
5)Follow up
This is the most painful phase of a short sale. most underwriters are over-worked with hundreds of short sales. Follow-up is therefore very important.
6)Attend BPO appraisal
If your offer looks good, the lender will then do an appraisal (BPO). They will contact you so you give them access to the property.
Be sure you are present for the BPO appraisal.
While you may not influence the outcome of the appraisal, pointing out important issues like roof or foundation repairs can significantly affect the appraisal value in your favor.
7)Acceptance or denial
The lender will then accept or deny your short sale offer. You may need to submit a counter offer if your offer is denied.
8)Close the deal
Next is to close the deal and follow your exit strategy to make money!
by: Simon Machcria
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