Essentiall Steps to Short Sale

HI! My name is Ashley. Im 20 years old and just getting started in real estate investing in Las Vegas. I feel that I have a pretty good foundation as far as being an investor. My grandfather has been investing for a long time and rather than just tell me the answers to my questions, he has sent me here to do my RESEARCH.

Im really puzzled about how to approach a bank and tell them that Im interested in their REO’s. What department do I ask for? Do I tell them Im an investor? Do I just ask for a list of their REO’s? And from that point I just make offers on the ones that can be haggled? IM just so interested in it but up until this point Ive spent most of my time working with preforeclosures. Any advice would be greatly appreciated… THANK YOU IN ADVANCE… and sorry if this is a duplicate post. :slight_smile:

Las Vegas

You’d do better paying for a subscription at realtytrac or something, and search for pre forclosures (there are a lot in my area), sometimes they have all owner contact info, and tax assessed value, and sometimes they don’t (they usually don’t). At that point I wouyld search my city’s assessor’s office records ( my city has it online). They usually let you search by owner, or address. From there just take the address and put it in, you get all of the owner info plus, the last sale price and date, and the city’s latest appraised tax value. In my state the appraised tax value is about 70-75% of the fair market value. So I take the appraised tax value divide it by 70% and I have my FMV. This comes in handy, b/c you are getting a fairly accurate appraisal for free, and you know what you are working with. Then contact the owner and gain there trust make sure they know that you are about to do everything that you can to help them. Get him to sign an authorization to release form and a sales contract for what you want to pay for the property. The is where the FMV comes in. Find out what is owed on the house and subtract that from the FMV. That is your equty. If it is not that much don’t worry you should be able to create more in the sale. Take some pics of the property, and prepare a repair estimate (make sure it is very detailed), take some pics, and get some comps. Then call the LOSS MITIGATION department at the bank, tell the person handling the foreclosure that you are trying to help the owner, and that you are willing to pay XXX amount for it. Then fax in the pics, comps,authorization, and contract. Then you may get a counter keep going back and forth until you and the bank are satisfied. That is about it.

Thank you so much! I was shocked that I couldnt find any really detailed books on short sale. My only other question is about a short sale packet that I keep hearing about. Is that something i have to get from loss mitigation? or is that something Im supposed to put together on my own?

You need to order the package through loss mitigation, although some banks have it on their websites. Make sure you have power of attorney on the property, because some require that. When you get the package gather all the information as quickly as possible and get it back out. It sometimes can be a lengthy process. Hope this helps!!!

Do you have a sample of a release form that you can get me. If you don’t have one if you can describe. Also I am a newbie to this web site. I have read articles through page 4 and have responded to a few. I am not sure exactly how to find whether specifics had been addressed in my posts. There are so many articles how do you keep track of 3 or 4 when they are so spread out. David


A few site basics:

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YOu can get the $20 book “The Pre-Foreclosure Property Investor’s Kit” by Thomas Lucier. Short Sales and more are explained in detail and it’s worth it (I’m not affiliated with Thomas Lucier, the book, or publisher in any way.)

Many banks are motivated to accept short sales instead of having to go through the expense of foreclosure, so if you find a property where the homeowners are 2 or more payments behind, get a signed release from the homeowners allowing you to discuss their loan with the bank - including loan# and bank phone #. Call the bank’s Loss Mitigation Dept., tell them you have a release you’d like to fax in right now, fax it in, and then talk to them explaining the hardship situation, and telling them you’d like to help out by buying the house, but you can’t pay the amount owed on it and still have a positive cash flow on it as a rental…etc. Then ask, given this situation, would your dept. consider a short payoff of the loan? Yes? Could you send me out a Short Sale packet?

The packet will tell you exactly what is needed. They can be a bit different from bank to bank. So, just get it and figure it out. Really quite simple - main part, a purchase agreement with the amount you’d like to pay, a statement that the Seller will receive no proceeds from the sale, probably want to include that it is subject to the bank not pursuing a deficiency judgment, and definitely want to include that the agreement is subject to the bank’s accepting the contract as a short payoff…

The book explains more.

Good LUck,
C :smiley:

Ashley, keep in mind these short sales are time consuming and can be brutal…Right now I am 0 for 5 or so, but I’m learning something everytime so it is far from a waste of time.Your buyers will have to get you information W2’s, bank statements, etc all basic things in a timely fashion, but you will soon see that their lack of organization is one of the things that led to them being in the bind they are in…Additionally the lenders, whom you would think would be moving at light speed to get the property sold, move in the Matrix like slow motion… My biggest frustration is that the lenders in the 1st position will not discuss the shortsale numbers in too much detail until you secure a 1k or $500 payoff amount on the 2nd…That makes the process even longer…Good Luck…And activity is key…I understand that being 0-5 is not where I need to be, but I’m positioning myself so that I can have the chance to look at dozens of deals monthly

“Short Sales are a contact sport” - Luxx