Important Steps For A Successful Short Sale In Real Estate Investing

Knowing how to do a short sale is a must for successful real estate investing. There are numerous properties in default or foreclosure, therefore it is necessary to learn how to do a short sale. Follow these simple steps for a successful short sale. 1) Identify a short sale candidate ome properties are good short sale candidates, others are not. To be a good deal, I consider a property that becomes profitable after only 10-20% of the mortgage has been discounted as a good short sale candidate if it has only 1 mortgage. If it has more than one mortgage, the second mortgage can be discounted as much as 70-80% or more. This creates enough equity for making profits. Of course, the motivated seller must be behind on their mortgage to qualify for a short sale. 2) Sign a Sale / Purchase Agreement Once you have identified the right property, you need to sign a contract to buy the house. This is required by all lenders. Also important is an Authorization to Release Information form, which allows you talk to the lender. This paperwork must be present for any lender to talk to you. A statement describing the hardship facing the seller is required by all lenders. A hand-written one increases credibility with the lender. 3)  Fax Authorization to Release Form Call the lender and ask for the fax number to fax Authorization to Release Form. It usually takes 48 hours to register in their system. 4)  Fax required paperwork Once the Authorization to Release Form has registered in their system, call them and ask what they need to do a short sale. Prepare this paperwork exactly as they need it. The lender's website usually carries this information. Fax all the paperwork as requested. Missing or incorrect paperwork can delay the short sale process for months, so it is important to get it right the first time. Again, it takes about 48 hours to register in their system. he short sale is then allocated to an underwriter who will see it through the end. 5)  Follow up This is the most tiresome step of a short sale. Most underwriters have hundreds of short sales to deal with. Follow-up is therefore very important. 6)  Attend BPO appraisal If your offer looks good, the lender will then do an appraisal (BPO). They will ask you to open the property for them. Make sure you attend the BPO appraisal. While you may not influence the outcome of the appraisal, pointing out important issues like roof or foundation repairs can significantly affect the appraisal value in your favor. 7)  Acceptance or denial The lender will then accept or deny your short sale offer. If it is denied, you may then need to submit a counter-offer. 8)  Close the deal Next is to close the deal and follow your exit strategy to make money! Simon Macharia is a real estate investor who has done numerous short sales. He runs his business from an interactive real estate investor website from http://www.realestateinvestorswebsites.net.