Purchasing a short sale property can be profitable since they are usually sold at discounted prices. However, the short sale process can be frustrating and long so above all be patient. The average short sale takes at least 90 days.
Finding 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 by neighborhoods you are interested in looking for signs that say “For sale by owner”, or look for vacant and/or abandoned properties.
Qualifying the Property
Once you do locate a property, make sure that the seller calls their lender to find out if the property qualifies for a short sale. If it does, then you can make an offer to the seller and start the process. If not, go on to the next deal.
Your Offer
Short Sales 101
There are a few strategies to keep in mind when negotiating with the seller’s lender so that you are successful.
- First, before you even make your offer, have a local Realtor provide you with the comparable sales in the area so you know what to offer or check online with the tax assessor or country recorder’s office to find recent sales in the area. The lender will get their own BPO(broker price opinion) as well.
- Next, keep your offer at or slightly below the current market value.
- If you have cash, then I suggest you purchase the home with cash as it will give you an edge over any other buyers that may also make an offer on the property.
- Keep the closing short. Lenders like short closings.
- Be prepared to purchase the property in an “as is” condition.
- Add an assignment clause and an escape clause that the offer is contingent upon your attorney or your partner’s review. This way you can assign the contract to another buyer if you want or get out of the deal if you find a better deal.
Short Sale Package
If you are going to negotiate the short sale, then you will need to send the short sale package to the seller’s lender. Be sure to include the following in the package:
1. Hardship letter signed by the seller.
2. Seller’s authorization letter authorizing the lender to negotiate with you.
3. Seller’s last two paycheck stubs.
4. Seller’s most recent bank statement.
5. Seller’s W-2 or 1099 forms.
6. Seller’s last two years’ tax returns.
7. Copy of purchase and sale agreement.
8. Any brokerage listing agreement.
Short Sale Strategies
Once you have submitted your offer, keep calling the lender to make sure they received the short sale package. Call every day until a negotiator has been assigned. Be patient and courteous.
Once you do get a response, don’t accept the first counter offer the lender makes. It may take a couple rounds of countering before you get the price you want. Know when to walk away if the lender is not willing to negotiate at your price. There are other short sale opportunities.
Check out http://kenswholesaledeals.com for more up-to-date information and real estate deals
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