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Submitted by: Simonn Machariaa
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.
Here is a step by step guideline of how to do a short sale.
It is important to know how to do a short sale 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.
Follow these simple steps for a successful short sale.
1) Identify a good candidate for short sale
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. This paperwork must be present for any lender to talk to you.
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.
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.
Get the short sale package 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.
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 step can get tiresome. Most underwriters have hundreds of short sales to deal with. It is therefore important to follow up to make sure you can get an answer soon.
6)Attend BPO appraisal
If your offer is acceptable, the lender orders 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
Your short sale offer will be accepted or denied. 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!
About the Author: Simon Macharia is a real estate investor who has done numerous short sales. He runs his business from an interactive real estate investor website from
realestateinvestorswebsites.net
.
Source:
isnare.com
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