Knowing how to do a short sale is a must 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 good candidate for short sale Not all properties qualify as short sale deals. A property that becomes profitable after only 10-20% discount on the mortgage is a good short sale candidate if it has only one mortgage. A second mortgage can be discounted by as must as 70-80% or more. 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 Once you have identified the right property, you need to sign a contract to buy the house. The lender will want to see a formal contract. Also important is an Authorization to Release Information form, which allows you talk to the lender. This paperwork must be present for any lender to talk to you. A statement describing the hardship facing the seller is required by all lenders. Preferably, have the motivated seller prepare a hand-written statement to increase credibility. 3)Fax Authorization to Release Form Call the lender and ask for the fax number to fax Authorization to Release Form. In most cases, you will need to wait at least 48 hours before it registers in their system. 4)Fax required paperwork After Authorization to Release Form has been accepted, ask them what documents they need for 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. Missing or incorrect paperwork can delay the short sale process for months, so it is important to get it right the first time. Again, it takes about 48 hours to register 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. It is therefore important to follow up to make sure you can get an answer soon. 6)Attend BPO appraisal If your offer looks good, the lender will then do an appraisal (BPO). They will ask you to open the property for them. Make sure you attend 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. If it is denied, you may then need to submit a counter-offer. 8)Close the deal Next is to close the deal and follow your exit strategy to make money!
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