The Short Sale Process

Many people are curious about the short sale process when considering real estate investment. Specializing in short sales and pre-foreclosures is an excellent way to become a successful investor, but the steps can be daunting to the inexperienced. The best way to get through the learning curve is to find a competent short sale mentor who knows what to expect and how to manage the obstacles that may get in the way of a smooth deal.

The short sale process itself has many stages. Once an investor has decided to pursue deals in short sales, the initial step needs to be finding a home that is in danger of being foreclosed on. There are many ways to find a home that is in the state of pre-foreclosure and would be a good candidate for a short sale deal. Finding a successful short sale expert who can guide an investor through the various ways available is an excellent idea. While it sometimes takes months for a bank to take foreclosure actions, it can begin the works as soon as the day after the second missed payment on the mortgage. Pre-foreclosure officially begins when the lender files a public default notice.

Once a home is found that is in a suitable situation for a short sale, it is necessary to talk with the homeowner and begin the paperwork required for a short sale package. There are many different documents that a bank or other lender will need to see in order to consider a short sale, and it is imperative that they be organized properly. Some of the documents need to be collected and submitted immediately, and others won’t be turned in until the entire package with an official offer is ready to go to the bank.

The short sale process will take several weeks to conclude. As soon as the real estate investor has permission from the homeowner to act on his or her behalf (and the document stating so in writing), the bank will take some time to review the case. Before any offers are made, the bank needs to know what the house is valued at in comparison to the amount of money owed through the original loan that has now been defaulted on. The banks use a BPO (or Brokers Price Opinion) to determine this value, and this is a crucial step in making an offer on the home that will be acceptable to the lender as well as most profitable to the investor.

As soon as the BPO has been determined, it is time to gather and present the entire short sale package. While it’s important for a homeowner to be at least peripherally involved throughout the short sale process, this is the step in which their efforts are most needed. Part of getting a bank or other financial institution to accept a short sale offer is proving that the homeowner is beyond the ability to pay the mortgage. They need to write a letter of hardship stating the circumstances that have put them in the unfortunate financial position they are in now, as well as include financial documents which show the contrast between their income and expenses.

At this point, the short sale process shifts to offers and counter-offers between the bank and investor. Once an agreement is reached in regards to the price, the investor moves on to a different phase of real estate investment: what to do with the property.

FREE SHORT SALE TRAINING CD Reveals
“How To Put 43,613.05 In Your Pocket In 42 Days!”