The Mechanics of Real Estate Short Sales

While you may have an idea of what real estate short sales are, you knowledge may just stop there. When it comes to putting one together, you can find that you do not know where to start. The various parties to the transaction have to be brought into agreement, and the short sale necessarily involves more effort than a simple purchase of a house. So, let's discuss the mechanics of the real estate short sale.

With the increase in foreclosures over the past year, there is no shortage of houses that could be suitable candidates for a short sale. What you need is a house where the lender does not expect to be able to recover all his money from selling it after a foreclosure. The homeowner will often be getting desperate, and you may find that you need to educate him/her on how a short sale benefits them, as compared to going through a foreclosure. Having a foreclosure on one's credit record can be devastating, making it very hard to every own a home again.

The cooperation of the homeowner is essential, and incidentally this is one of the benefits for you compared to buying a foreclosure. Often, angry owners whose houses are being repossessed will take out some of that anger on the house before moving out, damaging the property and sometimes even taking and selling the air-conditioning units and other items. In a cooperative short sale environment, you should not face the same problem.

Once you have found a house that you would like to try to buy at a short sale, you will need to put together an offer that you hope the lender will accept. Although you may have your own idea of the value, or access to sales records in the area, it can help to get a Broker Price Opinion, or BPO, for the property you are interested in. This will show the lender that you are serious, and also give him a third-party basis on which to assess your bid.

With the owner's consent, and the necessary forms, you can approach the lender officially and submit an offer for the short sale. Then all you have to do is wait for an answer from the lender. Unlike a normal house purchase, when your offer is accepted or declined within a day or two, it can take a few weeks for the lender to process and approve a short sale.

If you have the patience and knowledge to go through with a real estate short sale, you will find it can be one of the best ways to buy properties in the current real estate market.

We'll talk again soon,

David Oswald (aka “The Diamond”) is a National Short Sale and Foreclosure Expert who speaks throughout the United States on Creative Real Estate Investing Strategies. For more information, go to David Oswald Online.