OfflineHello DG family. I am sent here to pick your brains about short sales today, I seem to be a bit confused about contacting the bank, or lender, and making a proposal. If I'm talking to a potential who wants to go with the option of short selling their home instead of exercising a lease option until the market goes up so they can get some profit from their sale, what is the next step I'd take? Do I call their bank? If so, how do I get their lender to provide me with the potential's info? Do I let the lender know that I have a sure buyer if we can get a short sale at a certain price? I definitely appreciate all your help. Toodles.
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I've done one short sale in the past. In order to proceed, we had to contact the seller's bank directly (Countrywide at the time, now Bank of America). We submitted a purchase and sales agreement, pre-approval letter from our bank showing we could purchase the property, our bank statements showing proof of downpayment, and an appraisal and comps from our real estate agent.
If you have a sure buyer lined up, I would say you would need all of that documentation from them. Even with all of our docs in order, the short sale still took about 6 months. However, we did get a great deal on the place!
Hope that helps,
Tom
Thank you for the response. Now as the investor do we have to get any type of clearance to work with their lender and getting any of there personal info?
Yes, you'll have to get authorization from the seller to review their loan. Typically the lender will have a form for that, and once the seller signs, it allows you to contact the lender directly to get some information on the loan. When I say "some" info, they won't give away social security numbers, but generally will give you balances, # of payments behind, etc.
One key tip is that the amount you're offering in the short sale must match the comps in the area. For example, the loan amount is $100k and you offer to buy the house at $50k. If the comps are showing the house is worth $75k, the bank will be reluctant to only accept $50k and approve the short sale. That's where having comps and an appraisal to submit with your offer comes in handy.
- Tom
Tom, thanks for all of your help, you definitely gave me clarity on short sales. I think I can put all of the pieces of the short sale puzzle together now. See me and my brother are focusing on wholesales, but the first motivated seller to call my 800 number is in a short sale situation so I want to make sure I got it together. Thank you very much.
You're welcome - good luck with everything!
- Tom