Short sales

[Jorge Ruiz]

Hello BP!

I realize that this may be a question that has already been asked: Is it recommedned that a newbie go at it alone on a short sale? What are the top 3 most important things I should know before going after one of these?

Thanks BP

[Jennifer Kinzle]

@Filipe Pereira @Jorge Ruiz Going solo on a short sale is pretty difficult. The top 3 things you need are to have extra time, extra patience and an experienced agent. Here's why: all short sales are required to be listed with an agent on the MLS for the widest exposure to the public market place. Closing can take 4-6 months.

Without a doubt, the single most important thing you can do for working short sales is to team up with an experienced short sale listing agent.  The buyer's agent won't be able to do anything to push a deal through, so get it on the listing side.  Also, at least for Illinois, if you're a licensed Realtor, there's no double dipping.  You can't be the buyer and the buying agent too, and collect the buyer's side of the commission.  

Ideally, the listing agent can work with you, the investor, on a per property basis, as long as it is an arm's length transaction.  If you want to buy the home and you bring a home seller who is ready to list to a short sale agent, with your serious offer ready to go, it is very likely you'll be the one to get first crack at the deal.  

With that being said, some short sales won't ever get done - judgments, liens, back owed HOA, or an auction date in two weeks' time, can really mess up the process.

Realtors run from these deals because of the heavy paperwork and difficulty in closing the deals.  The commission is covered by the bank, but the long hours of work mean a very low rate of return.  They need to have a team in place and really know what they are doing.  Some Realtors and attorneys rely on a third party negotiator service to handle the lender part of the negotiations.  Be sure to ask if they do their own negotiations in-house or if it is sent out to someone else.

The silver lining in all this is that you can often get a short sale in good condition, for below market price, with few other investors interested in it.  Very few bidding wars happen on short sales, which can be a benefit for many investors.