| 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.
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. 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
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 of hardship is also 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.
Usually it takes 48 hours to register 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 requested paperwork. 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 tiresome step 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 contact you so you give them access to the property.
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!
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 http://www.realestateinvestorswebsites.net . |
