Short Sales

Can anyone tell me where can i find information on how to do a short sale correctly please.

I attended a seminar on Short Sales last summer. The information provided by the guest speaker was motivating and informative. Walking to my vehicle after the seminar I decided that I would devote some time to short sales to see how well it worked. After all, they guy made it sound pretty easy. Which, it kind of was. My first deal made me $54k. I bought the house for $50k and sold it for $104k. There was a $96k lien on the property that put it into foreclosure.
When I got home the studying began. I found hundreds of sites on the internet about short sales. I bought some materials and paid for some memberships that I thought where the best I found and that would be helpful for me in dealing with short sales.
This was last summer, 2005. My advice to you is this: DO NOT SPEND MONEY ON SHORT SALE MATERIAL! It simply is not needed. I discovered that 99% of the stuff you will find will not apply to your state and the information is out dated. I learned that the fundamentals of a short sale are all the same no matter what state you live in, however the laws do differ. What may be legal in one state is not legal in another. So paying for advice and literature on this topic from a guy that was successful in Arizona might not help you out much if live in Maine. A lot of them offer documents that are supposed to help you complete a short sale. Only two of which I was able to use in my state, the POA and the Auth form.
Your question is “how do you find information on how to correctly do a short sale.” My response is this: First find a property in foreclosure. I have found people through my hair dresser, the county courts, and even standing in Home Depot in front of the for sale by owner signs.
The rest of the process is lengthy but pretty much the same across the board; I don’t have time to go into it here. If you would like to know what I did to complete my first short sale let me know.
For those of you thinking this might be a creative way to sell something don’t bother contacting me. I am offering help (FREE ADVICE) to those that want it. I am not interested in buying anything or selling anything. I am not interested in how you do a short sale. I will not respond to anyone outside of the United States. This offer is strictly for those that know very little or nothing about short sales that would like to learn the basic idea behind them.

P.S. Notice the #2 response above. It’s a common mistake that most people make when they are promoting their own products. They state : “I am very happy with the education that I have recieved through Nouveau Riche. you can check us out at

They say you can check “us” out at… If they were indeed talking about a third part that they received the training from they would say “I” not “us”. This is an advertisment for the study program.

Just wanted to point that out. ;D

P.S.S. A moderator removed my email address from above. I got a butt load of responses from people asking for help. I sent out a 6 page letter answering the questions I got. If you also would like help with short sales you will need to contact me via these boards.

<<They say you can check “us” out at… If they were indeed talking about a third part that they received the training from they would say “I” not “us”. This is an advertisment for the study program.>>

B-I-N-G-O! Good call, Matt! I’ve been killing those ads as I find them…


Matt, what would ???you recommend for me to do if I know someone who’s a potential distressed seller. I believe his house is 50% paid off. Does this mean there’s equity in the house?

The bank has not foreclosed but he thinks they will sometimes this year.

Since I’m so new at this and I would like to offer some help, how could I offer to take over or possibly buy his home?

If I sound like I don’t know I’m talking about. I don’t. But I have to start somewhere.

anxious beginner…

Those are the ones your looking for. I’d find out what his loan payoff amount is, and is there any leins on the property? Contact a mortgage company and get pre-qualified and work a deal with your friend. Raise the price to help with your closing costs, or raise it some more and pay for repairs and put some jingle in your pocket. All you need to know is… whats the fair market value of the home?

If you qualify, your in, if not, I would get one of your investor buddies to buy it and make a finder fee.

Hey KV,

Is this person related to you? The reason I ask is if you care for them and they are not yet in foreclosure you might want to help them avoid it all together. If not, wait for the lender to file foreclosure against the property in the county it is located. If indeed the property is 50% paid off and there are no other liens against it then I would advise to refinance.

First realize that I do not know the entire situation so my advice maybe off. Based on what you wrote there could be a couple options for you.

Understand that a short sale is only available to properties in foreclosure. No lender will discount a loan BEFORE the foreclosure process starts. The closer a property gets to the auction date the more willing the lien holders are in working with you.

I tell you this because it looks like the property is not yet in foreclosure. So until it is you need to sit tight, but stay up to date with the property.

You say the property might be 50% paid off. You ask if you can take over payments or buy the home. Here are some questions that need to be asked.

  1. Is this the primary loan?
  2. Are there any other liens against the property?
  3. Are the taxes paid current?
  4. What is the appraised value of the property?
  5. Is the property in Bankruptcy?

If the home is in fact 1/2 paid off and there are not other liens against the property I would suggest doing one of two things.

One: If the loan is assumable and/or if the lender agrees, you should take over payments. Part of that would be switching the deed into your name. Then you can turn around and sell the property for fair market value as an average real estate sale. Or you could keep it and leverage it out to purchase another property. Or you could keep it, refinance and put some cash in your pocket. It all depends on your situation and what you want to do with it.

Two: You could purchase the home from the homeowner for the amount of the current mortgage note (or a little more to give them some pocket money, you negotiate that with the homeowner). Then turn around and sell it for 90-95% LTV. The difference you put in your pocket.

Everything is based off of how the numbers work. The more equity the more room to work with. At the same time, in a short sale, the more equity the more it hurts your chances of completing a short sale. Properties that are over leveraged are ideal for a short sale.

Good luck to you, I hope this information helps.

To everyone else that has wrote to me…I didn’t expect such a huge response. I am replying, please be patient.

Matt, thanks for your help. Let me answer your questions. There are no liens against the home. The owner is a relative. The home is 80% paid off. The complicated thing is there are three names on the deed and the other two person do not want to refinance.

That’s my relative wants to just sell and give the other two their share. The home is old and needs some work that’s why he does not think he can sell it at market value.

But, I don’t think I can take over the loan. My husb and I filed BK a year ago. And, the house is located at one of the prime real estate area in Calif. The neighborhood homes are selling at well over a million.

My relative hasn’t discussed with me what he wants but I would think he would want 800k for it. If you have any other thought please pass it on. Matt, you need to write in a way that a novice would understand.

What does “90-95% LTV” means? What does “over leveraged” mean?

Matt, do you think that it’s wise for a beginner to figure out the financing of such an expensive real estate? :-[

Hey KV,

What does “90-95% LTV” means?

 Loan To Value - What percentage the lender will fund of the total value of the property.  If the appraised value is $100k and they bought it at 90% LTV then the sale price would be $90k

What does “over leveraged” mean?

 When there is more money owed on a property than it appraises for you have an over leveraged property.

Matt, do you think that it’s wise for a beginner to figure out the financing of such an expensive real estate?

 Everyone has to start somewhere don't they?  ;)


Hey Matt! In reference to tonyrome post on asking for help on how to do a short sale correctly, you mentioned that you were willing to help short sale newbies on the basics. You also mentioned that you wrote a 6 page letter on that response to the above question. Well, I would really appreciate it if you could send me that 6 page letter. I’ve been curious about doing short sales for a while but not knowlegeable enough to try. Whatever you decide, thanks for responding.


HA HA…You’re not the only one that wants that letter, LOL. Every time I post something I get a HUGE response. I didn’t realize there were so many people out there interested in Short Sales.

I got my company to approve setting up a forum on their company website in order for me to help others with Short Sales and Foreclosures (they figured I would spend less time writing emails helping people and more time working if I could post responses once rather than replying to each individual email the way I have been). I already posted the letter there and I am currently working on other postings to help the beginner with short sales. If my company will approve it, I will start posting my notes for each deal I do so you can see the progress of a short sale as I complete it.

Like I said in my first posting, NEVER PAY FOR THIS INFO. I’ve already paid for it all. I will not post any of the stuff I have purchased but I will post, in my own words, how I do short sales and what I have learned.

This is not an advertisement for the company I work for or me. I simply do not have the time to keep replying to all these emails. This is the best way I can think of to continue helping all of you eager beavers and keep my job at the same time.

To contact me for forum information click on the little email link under my name.

I’m looking into this possible ss deal. owner is 17k behind on payments, owes 89k on an interest only mortgage and house in total shambles. I’m getting comps back in the 125k area. I want to put a package together and offer the bank half of what is owed on the present mortgage. Is this a doable deal?

I think it is a doable deal. If you think it is in shambles and a gut
down, then get 3 contractor bids for the work to be done.

This one might work out pretty good actually.
Get the owner to sign a purchase agreement contingent on the
lender accepting the SS arrangement.

The lender will order the appraisal. Be there to influence it to a
lower number.

When the lender gets the appraisal, they will either reject or
will negotiate your offer. At that point, show your inspection
report as well as pictures and contractor bids and the reason
you made a low offer.

Moreover, someone mentioned to wait till the foreclosure is
filed. I say No. Even when the loan is in collections, one can do
the Short sale. The lenders are happy to cut their losses sooner.

Actually, the person in the Collections call me when they cannot
get hold of the homeowner to schedule the appraisal. They are
aggressive :slight_smile:


Hi Andy,

What Krish is referring to is the period before the foreclosure is filed called the Notice of Default (NOD) stage. Different lenders call this different names, but they mean the same. After a homeowner falls behind on mortgage payments (usually minimum 90 days behind), the lender usually sends an official NOD letter and asks the homeowner to pay. At this point, you usually can try to negotiate a short sale and you don’t have to wait until the house is scheduled for the foreclosure auction.

Hope this helps…

Wow, this is a great place for info. My question is can you do a short sale after the house has already gone to auction and didn’t sell? The house has gone back to the lender. Example: My mom’s house just recently went to auction, this is the reason I got into real estate investing (good for me) She owed 50k and the house is in need of rehabbing. Sales in the area are 90-150 k. We offered (bus. partner and I) 55k they turned us down sent it to auction for min bid 58k ??? No takers. So if I can I would like to try short sale, and rehab it. Does this sound doable?

                         Sincerely, Brad Wilson

Thanks all for the quick responses. I had my contractor there this morning and he told me that the house is in worse shape. There is no foundation and the floor is starting to buckle,so its a complete demolition. Found out this house was originaly a garage hehe. Being that i have to now apply to the zoning board to see if i can actually erect a new structure, deal will be contingent on that also. Another twist is the old oil tank burried under the house, which may have to come out more expenses. My first offer maybe be somewhere in the 20k neighborhood. Is it possible?
Thanks, Andy

Thats good piece of homework.
State all the facts and the associated costs.
The banks want to see true numbers and not a plan to
rip them off.
It is worth trying.
You have nothing to lose.

It sounds entirely do-able. I would suggest waiting a little bit and then you should be able to submit (and have accepted) a bid even lower than your original 55k. Although at this point I don’t think it really qualifies as a short sale…

The owners just received a letter from the bank’s lawyer and it told them they were starting the foreclosure process. I am waiting til today to talk to the bank, because they only received my POA yesterday. I will ask for the short sale package and get to work. I’ll keep all informed as to the progress. Thanks for the help and responses.

Hi Matt,
I am fairly new to short sales, I would like to know if I (as a middle man) really have to purchase the house in a short sale deal ? is there any alternative ?

for example, if I negotiate with the bank to close a 100,000 house for 50,000, who pays the rest of the 50k ?

I dont think I can afford 50k from my side, any other alternative ?


If you don’t have the money to buy the property then have your investor do it for you.


You buy the property through a SS for $50k. It needs $10k in rehab and the FMV is $105k. Sell it to your investor for $95k. On the HUD 1 have the $50k wired to the lender, a construction lien for $10k paid to you or a contractor for the rehab (If you do not spend this money on rehabbing the property you may be breaking the law. If the rehab only cost you $8.5k to do, then the remaining $1.5k can be added on for labor and can go to you. But the rehab job needs to be done to code.) I would include $2k cash back to the buyer as an incentive. The remaining $43k is for you. And you still left the buyer with equity in the property.