You Must Learn to do This Process if You Want to Get the Best Deal on your Next Real Estate Project

A Short Sale is a process during a pre-foreclosure procedure, whereby the bank will accept a lower percentage amount of the face of the loan, as well as deduct the interest and penalties, due to the financial hardship of the homeowner. These houses are generally owned by people who have purchased their home with little, or no money down, or own homes that are in areas that are very slow to appreciate. They are also homes that are distressed to the point of value depreciation, or cannot be compared to other homes in the area because of the disrepair.

Every mortgage bank offers this process with homeowner loans. The division of a mortgage bank is called loss mitigation. Each bank’s loss mitigation department works differently from state to state. But the one common thread country wide is that all banks want to recoup as much money as possible and avoid getting stuck with a bad loan.

As an investor and as a realtor, I have personally helped many homeowners with the use of a Short Sale. This works particularly well with a 2-4 unit home in urban areas when the property is in distress, needs repairs, or the owner is having tenant problems with nonpayment and falls behind on mortgage payments.

There are many cases where you can get the homeowner a “relocation” fee of at least $10,000 from the lender as a part of the short sale settlement. This works out well for you because this is an added incentive for the homeowner to participate in the short sale for he will get money to move and start over where as if he got foreclosed on, he would get nothing. I suggest that you always request it from the foreclosing lender up front when you submit your offer for short sale because if you do not, they will not offer it.

Here are the main questions you need to ask whenever you deal with a property in a short sale situation. There is a lot of upside if done right, but many headaches if you miss on these points…

• How much does the person owe on their mortgage, including interest and penalties?

• How much time is there before the house goes up for foreclosure sale of default?

• How much is the house worth at market value after repairs, upgrades or renovations?

• Does the person have additional liens on the property, such as a second mortgage, equity lines of credit, tax liens, or mechanic liens?

• Does that person have a current bankruptcy, such as Chapter 13—all bankruptcies must be dismissed before ownership can transfer?

• Are there any additional owners on title? All owners must participate in the Short Sale process.

• And most importantly, ask yourself if the profit you will make is worth going through the Short Sale process?

Carl Agard is the Publisher and Editor in Chief of Boss XL Magazine and the Author of the new Book "Financially Surviving COVID19 (Finding Gems in the Real Estate Market)"

You can Purchase the Book Here!!

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