Knowing how to do a short sale is a must for successful real estate investing. The market is full of defaulted properties or even facing foreclosure, therefore you must learn how to negotiate with lenders. These 8 steps will guide you on how to do 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. All lenders require to see this. Also important is an Authorization to Release Information form, which allows you talk to the lender. No lender will discuss a third party mortgage unless they have an Authorization to release. A statement describing the hardship facing the seller is required by all lenders. 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. It usually 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 requested paperwork. 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 step can get tiresome. most underwriters are over-worked with hundreds of short sales. Follow-up is therefore very important. 6)Attend BPO appraisal If your offer is acceptable, the lender orders 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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