How Real Estate Short Sales Work
Short Sales are an excellent way to sell a property if you are currently unable to keep up the repayments on the mortgage. It is effectively a way of discounting a mortgage. It can also create good investment opportunities if you keep up to date with what is on sale.
To conduct a short sale you need to follow these important steps, you need to do each one and not try to cut corners as you may end up losing a sale.
First you must speak to your bank, request a short sales packet. If you speak to the person who manages your account get their details and request the pack. The pack will explain what you need to do to have a successful short sale and you will also have a valuable contact at the bank.
You will need to write a hardship letter to the bank, explaining why you are not making your mortgage payments. They may request a bank statement HUD-1 and a real estate purchase and sales agreemtn, and possibly other documents. You must send the bank everything they request otherwise they will not accept your request for a short sale. It will take around 4 weeks for the bank to get back to you so you will need to pull together all of your documents for your application as quickly as possible so that you can get the process started. In a lot of cases your property is being threatened with auction, if you get the process started and explain to the auctioneers that you have a short sale application, they will delay the auction to give you time to get the application approved.
You will also need to arrange for a real estate agent to go to the property and provide a valuation. This is a BPO a Brokers Price Opinion.
If you are an investor, this is where you can do well in purchasing based on the BPO. It can be much lower than the original price and you can get some good deals if you are an investor.
Short sales benefit all three parties, it saves the bank expensive foreclosure costs and it also relieves the homeowner of a home that they cannot afford to pay for. It also provides plenty of investment opportunities for people looking to increase their property portfolios.