please tell me the difference between short sale and preforecloseures. IM looking to start buying preforeclosures, but would like to keep my options open to possibly doing short sales. I just want to make sure I understand both processes. thanx.
Short Sale - Convincing the bank to take less than what is owed on the mortgage.
Pre-Foreclosure - When homeowners decide to quit paying their mortgage and after 90 days, the bank depending on the state you live in posts thats information somewhere for the public to see.
how do you go about convincing the bank to take less than whats owed? I have the names of the attorneys that handle the properties can I call them directly thanxs for responding.
First of all, if you’re going to attempt a short sale you’ll need to work directly with the homeowner. Then you’ll contact the bank with the permission of the homeowner (Authorization to Release) and find out where to fax the short sale package that you’ll put together. The short sale pakage needs to make a case for the bank to acept less than what is owed. Of course, they will base their decision on a BPO (Brokers Price Opinion) or appraisal. Depending on how good you are at influencing the BPO valuation will determine how little the bank will accept.
I typically shoot for betwen .30 and .55 cents of the after repaired value (ARV).
If you need an Authorization to Release document you can download it from my web site.
- Short Sale Mike
do we need a buyer ready for a short sale to work ?
Always better if you have a buyer. Not required if you don’t. You just have to hustle when you get the short sale approved to find a buyer. You can always start now to find a buyer, in parallel to your working the short-sale negotiations with the lender.
Did I read you correctly - you offer only 30-55% of the value of the property? So like only half the value of the property? I’m sure it must depend on the outstanding loan? What if there is little to no equity in the property?