Don't Come Up Short: Tips For Closing That Short Sale
In the midst of a struggling economy, short sales are in greater concentration in the market than they have ever been. In fact, many homeowners have opted for short sales in lieu of an impending foreclosure. If you're looking to buy and you want to make the most of your money, consider looking at some of the short sales that have hit the market. If you want the opportunity to capitalize on the short sale deals, talk with a real estate attorney about the best options for you. Additionally, here are some tips to help you secure that short sale property that you've got your eyes on.
Landing Your Financing
Most lenders are looking for a fast resolution on short sales, so you need to be sure that you have all of the paperwork completed as soon as possible. If you're going to be securing a mortgage for the home, you should get your pre-approval and include that letter with your proposal. If you can show that you have the financing in place, your offer is more likely to be accepted by the seller's bank.
In some cases, you can use the seller's lender for your mortgage. If you are going to do this, include your mortgage application with the short sale offer that your real estate attorney compiles for you. This will show your realtor and the lender that you are serious about the process, and it starts the process of securing your financing.
Negotiating the Sale
By the time a property hits the market as a short sale, that's an indication that it has already reached the mortgage company's foreclosure department. Foreclosure departments typically have strict policies about investment recovery and they may not be as willing to negotiate on the deal. If you want to have the best possible chance at securing the sale, it's important to start your negotiations with the right person.
Instead of talking with the representative in the foreclosure department, you'll want to talk with someone at the lender's loss mitigation department. These representatives are dedicated to helping the bank recover as much as possible on every outstanding property and potential foreclosure. This makes them more inclined to negotiate and flex on the value of the property, because their goal is to secure what they can, not necessarily to close out the past due balance on the property.
Before you can do this, though, your real estate attorney will need to get permission from the seller for you to negotiate directly with the lender. Since the loan you're negotiating to settle isn't yours, you will have to have the seller's authorization to act on his or her behalf.
Creating the Proposal
Before the lender is going to accept your offer, you are going to have to supply a proposal package that details how much you're offering and why. You will also need to supply a hardship letter written by the seller to explain the reasons for the mortgage default and why this short sale is in the best interest of the lender.
Once these documents are complete, you'll need to work with your real estate attorney and realtor to produce a cost-of-sale projection that shows the financial viability of the sale and financial statements that show that you can not only afford the mortgage, taxes and upkeep. The goal of the lender is to ensure that whoever buys the property is going to be able to afford to keep it for the life of the mortgage.
The more detail you supply in this proposal, the better your chances will be of success. Since most short sales need to be finalized within a couple of months, this is important.
With the information presented here and the support of your real estate team, you'll have a good chance of landing that short sale property that you've been looking at. Some short sale deals are marked savings over the full property value, and being prepared ahead of time is the key to securing a deal like this.