Many smart investors make substantial profit through ‘short sales.’
With the waning of the real estate market, many sellers, trying to avoid foreclosure, take this route and press the banks to sanction it. The lender, or the banks, agree to the short sales at a low price in order to stave of the attorney fees, portions of the real estate commission and at times, the cost of eviction. Sometimes, there might be some litigation problem leading to court case, damage to the property that needs immediate repair, solvency issues of the home owner. So, the property is sometimes sold at huge discount, often it is much less than the loan amount and many investors grab such opportunity. After getting it at a discount price from the bank, they make huge profit by selling the property afterwards.
While this may look simple and straight-forward, the whole process of affecting a short sale is often arduous and time-consuming. This of course is, understandable. Why should the lender or bank approve such sales? There lies the capability of the real estate investors – to negotiate a short sale. One has to be patience to achieve success in negotiating a short sale as, at present, lot of short sales are going on due to the debilitating market condition and the staffs at the banks and other credit institutions are hard-pressed to handle the sheer volume of them all.
First of all you have to find out the home owner who is interested in a short sale and get the paper work ready. Then you have to approach the concerned department of the bank that deals with such cases. Different banks give it different names like loss mitigation department, loan modification department, foreclosures department, short sale department etc.
A proper and effective negotiation with the bank personnel is of vital importance. They would of course, be interested to know about the current value of the property. Generally, the bank hires a real estate agent to provide them that information. You may to try to impress them by quoting an accurate price based on the locality and condition of the property. You may also pass some hints about its demerits and the reasons why it shouldn’t fetch a high price. The bank would also look into the solvency status of the borrower. You may in collaboration with the borrower present the bank as to why he wouldn’t be able to pay the remaining mortgage payments.
It usually comes down to a straight business decision. If the bank feels they can make more money from selling the house at a “Short Sale” than letting it drift into bankruptcy, then that will be the path they most likely take. If they have enough time!
If you have any questions about your upcoming short sale, please make sure to visit the most complete Louisville KY real estate website at www.GregFly.com. You can also call me anytime at 1-888-GREG-FLY or email me at greg@gregfly.com.
