If you’re thinking about starting as a real estate investor, one of the options for acquiring investment properties is by purchasing short sale properties.
Not sure what a short sale is? A short sale transaction takes place when a homeowner falls behind on their mortgage payment, and the original lender agrees to allow the property for less than that the borrower owes.
While the owner owes a larger amount of the balance of the home the bank agrees to accept a lesser amount to satisfy the debt.
As a real estate investor who specializes in short sales, you’ll need to know how to identify potential prospects and acquisitions, as well as have the free flow of cash to purchase the homes outright. After getting in contact with people who might be willing to liquidate their home in a short sale, you can begin to make offers on the home. If you’re able to come to an agreement with the prospect, the next step would be to verify that the information they’ve given is accurate. The way to do this is to ask to see a copy of the most recent communication they’ve received from their lender that states the terms.
You’ll also want to be sure that you check all relevant public records to find if there are any liens against the property. If you buy the property in short sale, these liens must get cleared to move forward with the closing. If you decide to complete the purchase, the next step is having the seller contact the Short Sales Department of their lender to request a Short Sale Form Package and a Third-Party Contact Authorization.
When the Short Sale Form Package is available, the seller needs to complete all the forms and paperwork and send the package back to their lender. Once this gets completed, contact the bank using your third-party authorization to speak with the representative who is working on the case.
Your representative at the bank will then provide instructions on how to submit your offer. For your protection, it’s always a smart idea to reserve the right to conduct a full property inspection if your offer is accepted. In some cases, the bank might come back with a counter offer, so be ready to negotiate if needed.
If you would like to learn more about how you can benefit from short sales, our Group is a great place to begin the education you need to succeed! Call us at 716-839-2689 to start the conversation today!