OfflineA short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency.[1] Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties.
A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower; however both will often result in a negative credit report against the property owner.
Definition by Wikipedia
Steps for short a short sale
1. A short sale package must be submitted to the mortgage company’s “loss mitigation” department. This package is a long list of documents including a contract, a HUD-1 settlement statement, tax returns, pay stubs, bank statements, a hardship letter explaining why the homeowners cannot afford their mortgage, and a financial sheet displaying income and expenses.
2. Once this package is completed and submitted, the mortgage company will order a BPO. This is a broker’s price opinion (or an appraisal) so the bank can verify if the offer is sufficient. The bank has the option to accept, deny or counter any offer you submit to them. Your offer not only has to be approved by the bank, but also by the investor who actually backs the loan for the bank.
3. Upon receiving an acceptance letter from the bank, they will typically give you thirty days to close the transaction and wire the funds to them.
Once completed, the short sale creates a win-win situation for everyone involved. The homeowner was able to sell a house that they were over-leveraged on (they sold for less than they owed on the house). A buyer is able to get a great deal on the property. The bank took a non-performing loan that was in default and was able to release the loan. They are now able to take that “bad debt” out of their books. It makes sense for them to lose some money in order to do this. If they had to foreclose on the loan it would cost them even more money than they just lost on this short sale.
By
Brian CT
Hi SCarlson:
I just posted a response to this topic earlier today. Banks, here in Richmond, VA; are less inclined to accepting offers for short sales that deviate more than ten- to twenty-percent less than the "fair-market" value of a property. The area banks are aggressively holding on to properties and trying to wait out the market for the prices to rebound.
How do I locate a bank that is equally ambitious to unburden their portifios of these cumbersome fund draining, asset eating, over-bloated properties???
Anyone with any ideals would be welcomed by me for any suggestions!!!
The Short Sales your talkng about are the ones where the Realtors list them to high because the more the property sells for, the more commission they make.
Get to the Home Owner before they do.
The BPO is the most important part of a short sale & most agents don't even try or know how to influence the BPO & show all the repairs needed.
Most situations, a Cash offer is the fastest way to help get the ball rolling to sell fast before the auction date approaches. If the BPO/appraisal comes in to high, no one can or will want to buy the property.
1. Find distressed H.O. looking to Short Sale & get it under contract using your Real Estate agent as the listing agent.
2. Agent lists the property low & you submit the short sale pkg.
3. Get 2 different contractor bids on the property.
4. Bank orders the BPO/appraiser to come out & make sure your the point of contact to let them inside.
5. Have all your contractor bids & comps in hand to show the BPO & ask if they will show the bank why your offer is what it is..
6. Get the approval & close on the deal
If BPO comes in too high, your done or you have to let it expire & order a new one in 3 months.
There's a boat load more in the middle of this process & a huge learning curve to get your short sale pipeline going but if your wanting to get into the short sale arena, it takes patience & a strong effort willing to help Home owners avoid foreclosure. Even if the deal doesn't work for your numbers, atleast you got the BPO low enough & the property can then sell to a retail buyer & sure enough, that Home Owner is going to refer you to more people because you stuck it out & helped them out of a foreclosure.
Jason S.
San Diego, CA.
**All CASH House Buyer!**
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But what if the short sale is listed by the bank because the owner abandon the property? Dosen't that make my job easer?
Ed
If the H.O. bailed, the bank can't just list the property, they would have to foreclose to take the property back.
Hot lead if the H.O. bailed, but you would have to find the H.O. & get the prop under contract before the prop goes to auction & or the bank forecloses.
Jason S.
San Diego, CA.
**All CASH House Buyer!**
Refer Us To Neighbors, Friends & Family, Earn $1,000
LIKE my FB page http://www.facebook.com/JandBHouseSolutions
find a seller who's behind on payments; refer the homeowner to an agent who specializes in short sales; tell the agent that you want to purchase the property. The agent will make commission from both the homeowner (bank) and the buyer (you), so will be inclined to submit your contractor bids and anything that will help get your offer accepted by the bank.
Learning and progressing every day,
Valerie
Valerie
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