Short Sales
All avaiable fl keys short Sale inventory plus information-see below the
listings:
For more information on any of these properties pleases contact
me
Overview on Short Sales and Foreclosures
The Basics of “Short Sales”
by William Bronchick
You will likely come across dozens of properties in foreclosure with little
or no equity, that is, the seller owes at close to or more than the property
is worth. In these situations, lenders are sometimes willing to accept less
than the full amount due, commonly referred to a "short pay" or "short
sale."
Negotiating a short sale with the lender is a difficult process, generally
because it is a daunting task finding a bank officer who has the authority
to accept a discount. You will have to call around to locate the lender’s “Loss
Mitigation Department.” More than likely, each lender you deal with
will have a separate name for this department, so be patient when calling.
Much like getting your phone bill corrected, you can expect the process to
involve a lot of waiting on hold and being bounced around an intricate maze
of automated voice mail systems. Once you get in touch with the right person,
then the negotiating begins.
From the lender’s perspective, a short sale saves many of the costs
associated with the foreclosure process - attorney fee's, the eviction process,
delays from borrower bankruptcy, damage to the property, costs associated
with resale, etc. In a short sale scenario, the lender gets the property
back faster, so it is able to cut its losses. Your job as the investor is
to convince the lender that it will fare better by accepting less money now.
The lender will want some information about the property, the borrower and
the deal he has made with you. Specifically, the lender wants to know what
the property is worth. The lender will generally hire a local real estate
broker or appraiser to evaluate the property (called a broker’s price
opinion or “BPO”). You can also submit your own appraisal or
comparable sales information. In addition you will want to offer as much
specific negative information about the property as possible. Also, include
some relevant information about the neighborhood and the local economy if
things are bad (copies of newspaper articles with “bad news” may
help). A contract’s bid for repair estimates should also be submitted,
which, of course, should be the highest bid you can obtain!
The lender will also ask for financial information about the borrower. Sort
of a backwards loan application, the borrower must prove that he is broke
and unable to afford the payments. The borrower must show that he has no
other source of income or assets to repay the loan. This process may involve
as much, if not more paperwork than an original mortgage application! The
borrower should submit a “hardship letter”, which is basically
a sob story about how much financial trouble the borrower is in. This may
require a little literary creativity, and some help on your part. Don’t
lie, just paint a picture that doesn’t look good.
Finally, the lender generally wants to see a written contract between you
and the seller. The lender wants to make sure the seller isn’t walking
away with any cash from the deal. Generally, the contract must be written
so that the buyer pays all costs associated with the transaction, so that
the “net cash” to the seller is the exact amount of the short
pay to the lender. A preliminary HUD-1 settlement statement is often requested,
which can be difficult, since many title and escrow companies simple won’t
prepare one in advance of closing. You can prepare your own HUD-1, and simply
write “preliminary” on the top.
Don’t be surprised if your short sale bid is rejected. Lenders aren’t
emotionally attached to their properties, so they aren’t as likely
to give you “steal.” Many short sales fall through if the BPO
comes in too high, which is often the case. You can’t pull the wool
over a lender’s eyes - if the property isn’t is need of serious
repair, it is unlikely you can convince the lender the property is worth
a whole lot less than the appraised value.
If you are interested in these properties please contact me and I can furnish
you a list of properties
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