This house was listed at 125,000 and previous buyer walked out. I made an offer of $108,000 because the sellers were out of the county so people do not know about the home resulting in no offers. The agent said she had one other offer but would rather work with us(maybe because I have 800+ credit and dont have to sell a home or anything). So my real estate agent (who is familiar with short sales)had send everything to make the offer on Friday. She told us they should find out by that Tuesday(4 days) if the bank had accepted my offer. Do you think I have a good chance of getting this house or at least a counter offer?

If the bank approves it, does it mean that there is a set price on the house or they are willing to negotiate offers? I have been trying to buy one for the last 3 months and have been unsuccessful in all 4 offers I have submitted on 4 different properties. Should I just forget about short sales?

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A successful short sale package begins with calling the lender who owns the loan or mortgage. Stipulations and requirements for these types of sales vary from bank to bank. The only way to know what is required of you is to make a phone call to the lending institution. Make sure you talk to the supervisor who is responsible for the final decision in the application process, not the “delinquent payment” department. It may take a few phone calls, but by talking to the person in charge you will be better informed about the entire sale process.

A letter of authorization is usually required to begin the process. The letter stipulates that the lender can talk directly with your real estate or closing agent, lawyer, or title company without you being present. This letter should include the address of the property, reference to the loan number, your name, current date, and your agent’s and/or lawyer’s name and contact information. While this letter is not required by law, it will simplify the process for the lending institution, thus making it more likely that they will approve the sale.

A typical short sale package includes a preliminary net sheet, a letter of hardship, proof of current income and assets, copies of the last three months of bank statements, a CMA (comparative market analysis), and, once the sale is finalized, a copy of the purchase agreement. A preliminary net sheet lists the expected sale price of the property minus the closing costs, realtor fees, unpaid loan balances, outstanding payments due, including late fees, and any accrued taxes that may be owed on the property. A realtor can usually prepare this sheet for you.

A letter of hardship is a letter that describes why you have fallen behind on your payments and why the sale of the property will be less than the amount owed on the mortgage or loan. This letter should by as truthful and heartfelt as possible, and should be written by you. In it explain why you have fallen behind on your payments. This could include unexpected medical expenses, a death of a wage earner, or a lost job due to layoffs or cutbacks. Most financial institutions look down on excuses that relate to being fired from a job, unexpected legal fees due to lawsuits, or divorce settlements. Remember that banks do not like to receive partial payment on an outstanding loan. You have to convince them that you need the help.

Proof of income and assets is a declaration of your current financial status. This should current income levels, backed up by back paycheck stubs and bank statements, any other properties or assets of value that you may own, any stocks or bonds you may own, or any number of other things that a bank may classify as collateral. Banks vary greatly on what they require to be included. Therefore, you will need to contact the lending institution to find out the details. Remember you want to be as honest and accurate as possible. Finally, a comparative market analysis will help prove that you cannot sell the property for the value of the loan. This analysis includes recent property values and impending market sales, and can be prepared by your realtor. Collect these documents and letters to create a successful short sale package.

If you’re a preforeclosure investor, with the tightening credit markets, you have no doubt noticed how much more difficult it is these days to close short sale deals.

In the past, plenty of hard money options, along with double closings and simultaneous closings made closing short sales a breeze. However, with the credit crunch, mortgage fraud, and tighter restrictions with lenders and title companies, closing short sales isn’t as easy as it used to be.

However, there is still one very simple and easy way to close your short sale transactions without using double closings, hard money, simultaneous closings, or even the over complex land trusts.

That method is using back-to-back closings to get all of your short sale deals closed and funded on time. Back to back closings take a short sale deal and turn it into two separate and distinct transactions. The first transaction is the homeowner facing foreclosure selling to the preforeclosure investor. The second transaction is the real estate investor then selling the property to the end retail buyer.

The easy, legal way for the real estate investor to do this type of transaction is through the use of an option contract. The option contract gives the real estate investor a vested legal interest in the property through an Option Agreement. The option is subject to the approval of the short sale.

Once the short sale is approved, then preforeclosure investor must complete the second transaction. That transaction involves the investor selling the property to an end retail buyer. The preforeclosure investor can legally sell the property, because he has executed an Option Agreement. This Option Agreement, which should be recorded at the local county courthouse for where the subject property is located, gives the investor the legal right to sell and market the property.

Before attempting to use a back to back closing, the preforeclosure investor should make sure that they have all of the necessary forms and documentation to remain in compliance. Without the correct forms, addendums, and notarized signatures, the preforeclosure investor risks the transaction not closing on time, or even worse, not at all.

Short sales do not have to be a complex transaction if the investor arms himself with the proper tools and techniques. Back to back closings are the simplest and easiest way to close short sale deals in today’s ever changing and volatile real estate market. They are widely accepted by lenders, title companies, and title insurance companies throughout the United States.

Due to financial hard ships, a mortgagor may have his or her own home foreclosed by the lender. That means losing the home, and a certain sum of money. When a mortgagor fails to keep up with the mortgage payments, he starts to owe the lender more and more money. And as the interest compounds, the mortgagor soon finds himself in a downward spiral situation. The longer he delays the payments, the more money he owes, and therefore loses. The only way to avoid this scenario, is to seek professional help as soon as possible. There are several options for the mortgagor to choose from in the face of a possible foreclosure. So it is definitely possible to minimize the losses while the damage is still manageable. For sure, it would be a pity if a mortgagor fails to tackle the problem early and loses his home and a huge amount of money just because he is unaware that help is readily available.

It is beyond the scope of a single article to discuss all the possible solutions to solving a foreclosure problem. So let’s focus on the short sale option in this article. First thing first, what exactly is a short sale?

A short sale means both the mortgagor and the lender agrees to sell off the property at a price to offset the outstanding loan balance. The loan balance is usually discounted. The lender, however, in such a circumstance, will have the final sale as whether a sale is approved or not. Once the short sale is complete, the discounted loan is considered settled, and the mortgagor no longer owes the bank any more money, thus saving himself from having to potentially repay a huge amount of interest owed.

You would probably have observed that the goal of the short sale is to minimize loses and prevent further damage being done to the mortgagor’s already suffering financial situation.

For example, a mortgagor may have lost his job during a recession. And because of the recession, he is unable to land himself a new job any time soon. So he finds himself unable to meet the mortgage payments. Now he wants to consider selling away his property, since he cannot keep up with the payments. But he finds that the market value of his house has gone southward, again due to the bad market conditions. He realizes that no matter what he does, he is still losing money. If he doesn’t pay up soon, his home will be foreclosed by the lender. And before his home is foreclosed, he would have owed the lender several months of mortgage payments, on which is accruing interest as long as he doesn’t pay up. So to stop the situation from getting from bad to worse, he may have to consider negotiating a short sale with the lender. This will help sell the house faster, as the mortgagor can now sell it at a lower price to offset the discounted loan amount.

Do consider engaging the help of professionals to help negotiate a short sale, as they may be able to sell the property for a discount. In addition they may be able to assist in finding a new home. Do not go through a foreclosure and ruin your credit get professional short sale help now.

If you’re a pre-foreclosure investor, having short sale funds available to finance all of your deals is the perfect investor solution to take advantage of today’s booming foreclosure market.

In the current economic climate there is no income, no cash, and no credit required. You can obtain funding to close all of your deals in 48 hrs!

With the sub-prime mortgage debacle, and the recent tightening of the credit markets, you have no doubt noticed how much more difficult it is to acquire financing for almost any real estate deal these days.

In the past, plenty of hard money options, along with double closings and simultaneous closings made closing REO’s and Short Sales a breeze.

However, with the credit crunch, mortgage fraud, and tighter restrictions with lenders and title companies, closing on Real Estate Acquisitions isn’t as easy as it used to be.

However, there is still one very simple and easy way to close your REO, and Short Sale transactions without using double closings, hard money, income verification, none of your own cash, No AAA credit, No simultaneous closings, or even the over complex land trusts.

That method is using back-to-back closings to get all of your short sale deals closed and funded on time. Back to back closings take a short sale deal and turn it into two separate and distinct transactions.

The first transaction is the homeowner facing foreclosure selling to the pre-foreclosure investor. The second transaction is the real estate investor then selling the property to the end retail buyer.

However, even if you are using a back to back closing, and your end retail buyer has secured their funds, what makes this work is that you need to secure your own funding, as the real estate investor.

So where do you get this funding of your deals? This is often called transactional funding, and today, there are many lenders making these types of loans. Lenders love transactional funding, because they are only lending for a period of a few hours, and this represents zero risk to the private investor’s cash.

With the end buyer’s loan already approved and in place, two separate and distinct transactions take place on the closing day. The first is the investor purchasing the short sale deal from the distressed homeowner.

This is funded by the transactional funding company. Immediately after this transaction has closed, the investor is then turning around and immediately selling the property to the end buyer.

The end buyer is using funds obtained by him through a traditional loan, or cash through lenders like Upperhouse Mortgage. Most conventional lenders today won’t have any issue funding these loans.

The only such exception are FHA loans, which at the time of writing this article, have a 90 day seasoning requirement. However, as the real estate market changes, and the housing market remains volatile, it is very possible that the FHA might change its guidelines.

Transactional funding is the perfect way for pre-foreclosure investors to fund their short sale deals in today’s foreclosure ridden market. There are plenty of choices for funding companies, all willing to fund these simple, easy short sale transactions.

However, one of these companies will even pay you a hefty commission to find deals for them up to $50 Million Dollars. You find it, they buy it, and you get paid a hefty commission. There will never be a better time for you to “Think And Grow Rich” in Real Estate!

Recently a potential client in Sacramento asked me if there were any advantages to avoiding a foreclosure by using a short sale and requesting their lender to forgive a portion of their mortgage debt. 

Although some credit professionals have a different opinion, most that I have talked with agree a short sale is less damaging to the homeowner’s credit.  I have been told a short sale blemish on your credit report will stay about 4-years while a foreclosure will remain a credit burden for 7-years.  If you are going to need a new car or even purchase a home in the foreseeable future this could be a determining factor in getting the loan and, if you do, the interest you will pay.

In my opinion, maybe as important as your credit record, is the personal pride and self-respect that can be maintained by avoiding a foreclosure by using a short sale.  Selling your home with a short sale strategy is no different than any other home sale.  You select the Realtor (you should make sure they have solid short sale experience and have a proven process), you make the marketing decision including price, reductions and other decisions and you negotiate with the buyer, finalizing the contract subject to lender approval of the short sale.    In other words it looks very much like any other house sale. 

Because of lender negotiations, the process of closing a short sale may take longer than a normal sales transaction but when the lenders agree, the seller moves out and the new buyer moves in.  In a foreclosures sale, the homeowner is evicted; the home may sit for weeks or even months vacant with no maintenance or upkeep.  Dead plants and brown lawns are the common calling cards for lender owned property.  Eventually a Realtor is hired by the lender and the home is most likely marketed as “Lender Owned” or “Foreclosure.”   This can and often is a humiliating experience for the homeowner

A homeowner who is experiencing financial difficulties, not able to continue to make mortgage payments and owes more on the home than it is worth is a good candidate for using a short sale to avoid foreclosure.  Using a short sale strategy to avoid a foreclosure can be better for your credit report and allow you to exit from a painful experience with your pride and dignity intact.

If you are a home owner and can’t continue to make your mortgage payments and your home value has dropped below what you owe, give me a call or talk to a Realtor with successful experience in negotiating with lenders.  You can reach me by email at julie@jalone.com or call me at 916 276-6883.

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