Short Sale Sellers10 Frequently Asked Short Sale Questions
Where do you find investors for Short Sales?
Depending on where you live, you may see investors who advertise in your local newspaper. Call the investors directly and ask them if they are experienced in short sales and would be interested working with you.
What is a short sale?
A short sale is really a form of pre-foreclosure and occurs when the mortgagee agrees to accept less than the loan amount to avoid foreclosure. A negotiated short sale results in a discounted purchase price for the buyer.
Can an owner profit from a Short Sale?
The seller cannot profit (monetarily) from short sale, but there are always exceptions to the rule.
What happens to the sellers credit rating when they allow an investor to short sell their property?
The loan will show up as “paid” on their credit report, but there will be a notation that says “settled for less than originally owed” or something along these lines. It’s more favorable to short sell than have a foreclosure.
How do bankruptcies affect the possibility of doing a Short Sale?
Most mortgagees won’t consider a short sale if the homeowner is in bankruptcy, because negotiating a short sale payoff is considered a collection activity. Collection activities are prohibited in bankruptcy.
Can somebody tell me what documents do I have to include in a Short Sale package?
Documents depend on the lender. Each lender has different requirements. It’s typical to require hardship letter, purchase and sales contract, ECOR, settlement statement (HUD 1) net sheet, pay stubs, bank statements and personal financial sheet (monthly budget).
What percentage of mortgage companies send someone out for an appraisal on a possible short sale?
All lenders order a BPO or full appraisal of the property before making their decision to accept or reject the offer to assess the value of the property.
What is a Due on Sale Clause?
“Due on Sale” Clause (DOS) Provision in a mortgage or deed of trust calling for the total payoff of the loan balance in the event of a sale or transfer of title to the secured real property. It authorizes the lender to declare immediately due and pyable sums secured by the lenders secuirty instrument upon a sale of all or any part of the real property securing the loan or transfer means the conveyance of real property of any right, title or interest therein.
How late in the pre-foreclosure process can you start a short sale?
Try to allow a window of at least 90 days to effectuate a mortgagee approved, pre-foreclosure short sale.
Will banks allow a short sale when the owner has some or a good amount of equity.
If a property has what the lender would consider a substantial amount of equity, chances are they would consider allowing the property to foreclose and then reselling it closer to the retail value. Focus on homes that do not have much equity. Your job will be to create the equity in the home by negotiating a successful short sale.
Tags: bank statements, foreclosure, hardship letter, lenders, monthly budget, settlement statement