The Short Sale Procedure For Real Estate Investors

by Thierrie Anderson on December 27, 2011

For real estate investors, buying short sale homes may be a huge opportunity. Evidently, there is a huge upside to being able to buy a property for less than the actual mortgage value. For those investors with the patience and fortitude to buy a short sale property, the payoff be able to be immense.

With this in mind, how does one go about buying a short sale property? First, you must realize that a short sale in real estate is when you purchase a property for less than is payable on the mortgage. The benefit to the buyer in this type of transaction is obvious. . However, because the lender will ultimately lose cash on the deal, there are a number of processes and potential pitfalls to be aware of. Because of this fact, dealing with a lender when purchasing a short sale requires a fair amount of work and patience.

Before trying to buy a short sale, you must be aware of the roles that each participant will play in the process as well as their motivation. Obviously the property owner is a big factor in the transaction and may be going through some financial turmoil which is leading to the need for a short sale. Before even beginning the short sale process, be sure that the property owner is willing to complete the transaction and understands the implications.

The next player in the process is the loss mitigation department of the bank. Because the institution is in business to make money, you will need to make a compelling instance in order for them to agree to a short sale. For nearly all institutions, they will only agree to a short sale if the property is at risk of foreclosure. With that in mind, the onus is on you to demonstrate that the deal is in the institution’s best interest.

The short sale process now is only a matter of crafting a purchase offer to the lender that includes reasons why it is in their best interest to do the deal. Develop a short sale offer with the help of the property owner. Include a letter from them explaining their inability to continue to pay on the mortgage as well all additional substantiation. Locate any and all areas of disrepair on the property and take pictures of them, and get an appraiser to come out and give an appraisal based upon the lowest marketable value of the home.

The next step is only offering to purchase the property at a given price and submitting it to the institution for approval. Present your purchase proposition along with the short sale package to the bank and gently push it through the approval process. It the request is approved, your purchase of the short sale goes through. If not, only modify your request and submit it again.

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