Buying a short sale property can be profitable as they are usually sold at discounted prices. However, the short sale process can be frustrating and lengthy, so above all, be patient. The average short sale takes at least 90 days.
Find the property
Starting the short sale process begins with finding the right property. Not too difficult these days. Here are several resources for finding short sale properties:
– Internet
-Realtor
– Wholesaler
– Bank
– County Recorder’s Office
– Drive through neighborhoods that interest you looking for signs that say “For Sale By Owner”, or look for vacant and/or abandoned properties.
property rating
Once you locate a property, make sure the seller calls your lender to find out if the property qualifies for a short sale. If so, you can make an offer to the seller and start the process. If not, go to the next offer.
Your offer
There are a few strategies to keep in mind when negotiating with the seller’s lender in order for you to be successful.
– First, even before you make your offer, ask a local real estate agent to provide you with comparable sales in the area so you know what to offer or check online with the tax assessor or country registrar’s office to find recent sales In the area. The lender will also obtain their own BPO (broker price opinion).
– Then keep your offer at or slightly below the current market value.
– If you have cash then I suggest you buy the house with cash as it will give you an advantage over any other buyer who may also bid on the property.
– Keep the closure short. Lenders like short closings.
– Be prepared to buy the property “as is”.
– Add a release clause and an escape clause that the offer is contingent on your attorney’s or partner’s review. In this way, you can assign the contract to another buyer if you wish or opt out of the deal if you find a better deal.
short sale package
If you are going to negotiate the short sale, you will need to send the short sale package to the seller’s lender. Be sure to include the following in the package:
1. Letter of hardship signed by the seller.
2. Authorization letter from the seller authorizing the lender to deal with you.
3. The last two paycheck stubs from the seller.
4. Seller’s most recent bank statement.
5. Forms W-2 or 1099 from the seller.
6. Tax returns for the last two years of the seller.
7. Copy of the contract of sale.
8. Any brokerage listing agreement.
Short Sale Strategies
Once you’ve submitted your offer, keep calling the lender to make sure you received the short sale package. Call every day until a negotiator has been assigned. Be patient and courteous.
Once you get an answer, don’t accept the lender’s first counteroffer. It may take a couple of counter rounds before you get the price you want. Know when to back out if the lender isn’t willing to negotiate your price. There are other short sale opportunities.
