Short Sale As An Exit Strategy

[David Battle]

Hi Guys,

Does anyone have any experience with buying a short sale property? I'd like to help out a seller who has several properties that would be short sales. Would it be best to refer her to a Realtor or could I make something happen with them? Is there an exit strategy that would work? On several of them the mortgage payment is more than the current rent payment. What would be the best approach?

[Hattie Dizmond]

@David Battle

A short sale isn't an exit strategy.  It could be part of an acquisition strategy, but it is actually a prelude to the seller being able to sell a property they are underwater on.

Here's the thing to realize...short sales take time to negotiate, sometimes a long time.  Some regulations have eased the pathway to a short sale for some people, at some institutions, in some circumstances...you get the picture?  There are a lot of variables.  As @Wayne Brooks noted, unless you are experienced in helping to facilitate a short sale, your involvement is likely to muddy the waters rather than help.

The fact that the mortgage payment is more than the current rent payment is irrelevant to you, unless you were looking to do the deal Subject 2.  Otherwise, you would refinance anyway, so you would get a new mortgage & mortgage payment.

There are realtors here in the DFW area who specialize in Short Sale properties.  They have experience with the Short Sale process.  However, unless you know one of them there in FL, I would simply suggest to the seller they locate one.  Otherwise, there are services and programs that offer help to owners who are underwater.  There is also the HARP program.

My advice is you Google Short Sale resources and provide the seller some links and information.  Then...tell the seller than once they have gotten a negotiated price or refinanced through a program like HARP, then can call you and you may be able to help them at that time.  

Underwater properties, particularly with negative cash flow, are albatrosses.  There is no margin and no income.