subject: Five Ways to Keep Your Short Sale Deal From Failing [print this page] Five Ways to Keep Your Short Sale Deal From Failing
In my last article, I listed five common ways that short sales can fail. In this article, I'll make some suggestions on how to potentially save the deal from failure. There are last-minute corrections, which can be implemented that can save the deal.
First Tip, when the buyer walks: Reduce the listing price and/or submit an offer from an investor. This normally can help extend the auction date.
Second Tip, when the BPO is too high: If the property has been listed a while, have the Listing Agent send in a listing-and-showing history on the property. Also include appropriate comparables to send to the lender. Then request a new BPO to more accurately reflect the current value of the property.
Third Tip, an unknown bankruptcy filing: The cure for this one is to normally have the homeowner's bankruptcy attorney file a petition with the bankruptcy trustee to release the property before the overall bankruptcy is complete. This can eliminate most of the time delay associated with a bankruptcy and normally keeps the buyer intact.
Fourth Tip, unknown judgments or liens: Have the title company in the transaction verify that the liens or judgments are appropriate for the homeowner. Next, if they are not correct, they can be dropped from the closing. If they are correct, immediately notify the parties of the transactions and began working on negotiating the terms.
Fifth Tip, mathematical errors on the preliminary HUD-1 Form: Double check the numbers on the preliminary HUD, prior to paperwork submittal. If the errors are not determined until the final HUD is complete, either reduce the amount of profit from the closing or resubmit HUD for new bank approval. Inform the closing parties of the potential delay caused by the errors.
The fix and flip market is still profitable today, even though we make less money than a few years ago. The key point is to understand that we have to be ever more diligent on calculating the offer. Note, formulas used to calculate offers on long-term hold real estate are not at all related to fix and flip formulas, and these deals are normally disastrous for the unsuspecting investor.
We talk much more about this in our REI mentoring program. After years of doing these calculations by hand, my partner and I have developed an online real estate software to make our lives much easier. We can now crank out offers and determine the exit strategy in seconds.
