With short sale houses, youíre dealing with the bankís loss mitigator. You agree to a purchase price and youíll be working with a short sale package. The package that you should always have at closing contains pretty standard documents including a purchase and sale. But it also has a hardship letter. Thatís what the seller has to admit to, detailing reasons they got into financial distress and the fact that theyíre not going to get out of it. It has also information on the sellerís finances currently and for the immediate future.
The reason the loss mitigator wants that is to prove that this person is not going to be able to heal this situation. Theyíre evaluating whether the seller qualifies for the short sale. Once you got all the documents completed, you send them back to the loss mitigator. You then contact the title agency or your attorney. Once they qualify for the short sale, itís a cash sale. One short sale I like to talk about was when the first mortgage was pursuing the foreclosure and I stopped it.
Fortunately for me, I had a cash buyer come along and cash me out on the deal. I made $45,000 on the thing.
The laws of this country change rapidly. Often they change when the issue that surrounds them is at the forefront. Well, the housing market is at the forefront. It has been for years.
It is best to keep yourself educated on them. If you have an attorney, make sure they are on top of foreclosure laws. They also differ from state to state. Just a random example, Pennsylvania allows no right of redemption and judicial foreclosure is available. Nevada does allow a right of redemption.
It varies from state to state. Your attorney can translate this for you.
Once you understand your foreclosure laws, you can better speak with your clients and others involved in a short sale. It makes things more comforting for everybody to know that they are working with someone who is knowledgeable.
Real Estate Owned properties or REOs are demanding top dollar. The banks are not selling these things for nothing. There are times when an REO can be landed as a short sale for a fraction of its price. But the banks donít start the properties at that price. It has to take some time before they will consider this move.
Often you can purchase an REO at something like 80 percent of its value. Some investors will jump on this because the neighborhood is nice or the property is just beautiful. Maybe they think they can make money off of it.
Usually REO properties are not in very nice neighborhoods. Banks are getting tons of properties and they want to get rid of them. It just takes some time to try to negotiate it as a short sale.
If the bank is in a judicial state, they have to hire attorneys and pay for lawsuits. That costs them money right? They want to get these properties off of their hands and get their money back.