Short Sale Real Estate: Tips for Savvy Investors

2 years ago

Any short sale real estate investor knows one of the largest challenges faced is dealing with the lender.  The short sale process is lengthy, especially when an investor has to work with more than one lender to agree upon a price suitable for all parties.  Three parts of the process that are often over-looked are the initial contact with the lender, putting together the short sale packet, and negotiating the figures. If you come to the deal prepared, then the process will go smoothly and the investment will work in your favor.

Contacting the lender can make or break the deal for a short sale real estate investor.  Your initial call should be to the Loss Mitigations Department. It may take you several tries to get to a live person who can help. Customer service can direct you if there is no direct number. Make sure when you finally reach the right department and establish a main contact person, you obtain all the information including full name, direct contact line and extension, and hours they work.

Always work in a professional manner with the bank and never raise your voice or make accusations. It will be frustrating because the banks have a large over-haul of short sale real estate and foreclosure properties with a dwindle number of staff.  Come to the conversation prepared. Banks can sniff out a new investor right away and you don’t want to ruin your chance for success. Have a list of questions you want to discuss and writing materials handy.

Never disclose that you are a short sale investor. The lender is most likely to turn you away if this information is present in the initial conversation. Tell them that you are a buyer or buyer’s representative. If they ask any questions, reiterate that you are a buyer.

After your first phone conversation, the lender will mail out a short sale packet. Filling out the packet completely and sending it back in a timely manner is highly important. Don’t skip steps or leave out important documentation because the bank will put your loan package at the bottom of the pile and forget about it.  The bank will most likely request materials such as:

  • Repair estimations
  • A hardship letter explaining why the homeowner cannot afford the mortgage
  • A cover letter stating your offer price
  • Market value estimation
  • Income statements from the homeowner

Once your short sale packet has arrived at the lender, they will order an appraisal of the property, or broker’s price opinion. The BPO usually comes back within ten days and will give you a price to negotiate around.  The bank will try to get the offer as close to the BPO as possible. Thus, you want the BPO to come in your favor. Sometimes this is out of your hands, but this doesn’t mean you can’t get the bank to go below the BPO.

Remember, it is important to come into a short sale real estate investment deal knowing what you are up against.  Always have patients with your lenders, fill out all paper work correctly and submit it with the appropriate documentation, and negotiate around your BPO.

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