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.
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.
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.
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.
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.
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.
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.