5 Secrets to Successful Short Sales
Success is all about finding the secrets others don't
have!
Finding the right and wrong way to approach a short sale is a must. With
foreclosures reaching such levels realtors and real estate investors need to
learn the
art of short sales
to become productive when buying or selling foreclosures.
Learning to apply these 5 money making secrets to short sale success will
permit you to successfully complete these wonderfully profitable deals. If
you are a real estate investor you have an immense opportunity to create
equity where none previously existed. If you're a
realtor, representing those who are purchasing or selling properties
which are about to enter foreclosure can assist you in surviving a downswing
in the real estate market.
Secret #1
Submit a complete package. Do not submit an incomplete package to the
mortgage lender. If you do, you can bet it will be put on the bottom of the
pile. You will need to include all the required information in the order
specified by your mortgage lender and make sure every item is completely
legible. Without following secret #1 the prospects of your short sale offer ever
making it by the front desk, let alone the decision maker, are nonexistent.
Secret #2
Have an appraisal done to get the current market value of the home and
structure your offer accordingly. The initial offer is crucial to getting the
short sale off in the right direction. As you do more short sales you will
become more knowledgeable with how different mortgage lenders function and how
they respond to new offers in different situations. Nearly every mortgage lender
will require you to raise your offer no matter how low or high it is. Your goal
is to have the mortgage lender order a
brokers price opinion or a full appraisal of the home. Make sure the lender
has not ordering just a drive by appraisal.
Secret #3
Make sure you meet the real estate broker doing the brokers price option or
the appraiser who is doing the full appraisal. This may be the most critical
part of making your short sale successful. Your job is to provide the person
doing the appraisal or BPO any information that might influence the valuation in
your favor to prove that the appraisal will justify your offer.
You should speak to the BPO agent or appraiser and let him/her know that the
seller is in dire financial straights and is depending on the appraisal. You
should have a list of repairs completed by a licensed contractor and have a
solid list of comparable sales showing that the property is worth substantially
less than what the homeowner owes. All these items are important but meeting
with the person doing the appraisal or BPO is at the top of the list.
Secret #4
The job of the loss mitigator is to get the case settled for as much money as
he possibly can, so do not take no for answer it will cost you thousands. Of
course understanding there are some circumstances which will limit the amount
the mortgage lender is willing to take is paramount.
Reasons for this may be any of the following -
- PMI (Private Mortgage Insurance)
- Fannie Mae
- Freddie Mac
- FHA guarantees
- VA guarantees
These mortgage loans are secured by
governmental or private agencies and as a result are limited to the
amount they will take for a home. If it is a
conventional mortgage
loan the settlement amount is arbitrary and set by the end lender or the
investor holding the mortgage loan. If you are having to deal with a
mortgage servicer rather than a direct lender, the negotiations will need to
be approved by the homeowner before any offer is agreed upon. Being
persistence will determine your success or failure in negotiating prices
which allow you to produce a profitable transaction.
Secret #5
Be ready to close on the home promptly, because once negotiations have
completed the mortgage lender will require you to close quickly, usually in less
than 4 weeks. If you are unable to close within this window you will have a very
difficult time negotiating an extension and may encounter trouble negotiating
with this mortgage lender or mortgage servicer in the future.
This problem does not usually arise if you are the end buyer, but if you are
expecting to flip the property you need to be sure that your end buyer is ready
to close when you complete the negotiations for the home. One way you can stall
is by slowing down the final negotiations until you have secured your end buyer.
Sometimes this can really work to your gain when the loss mitigator calls you to
see what is holding up your final acceptance of an offer. Many times you can get
an additional reduction in the homes price.
Certainly there is much more involved in doing short sales, but these 5
secrets to short sales are vital in getting a productive resolution to a
short sale case. Remember, being persistent and polite works wonders in
business, but do not leave any questions unanswered or you might just end up
holding a bigger than
average lemon.