FAQ on Short Sales, for investors

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FAQ on Short Sales, for investors

Jennifer KinzlePro Member
Real Estate Agent · Elgin, IL · Member since 2015 · 100 posts · 41 votes

Hello BP Investors!  

There is a lot of great stuff on the BP site and I always seek to use it as a resource.  So, right now, I'm working up a list of frequently asked questions on short sales and I'd like to get BP investor input.  A few I have so far:

How long does it take for a short sale to close?

What's an Approval Letter and why is it necessary?

What's a "pre-approved price" mean for a short sale? 

How can I get around a deed restriction on a short sale?

Can I assign or do a subject-to on a short sale?

How does a short sale mitigate 1st, 2nd and 3rd mortgages?

Why do I need to list a short sale with a licensed agent? Or, can I FSBO my short sale?

Why should I look into short sales for adding to my investment portfolio?

Can I short sale my rental property?

Ok, that's about as far as I've gotten.  What else would an investor like to know up-front?  Got any suggestions?Please comment below and let me know.  I also plan on creating a short sale companion guide for the average home owners as well, along with a video guide.  

Thank you!

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Brett Goldsmith
Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes
10y

How long does it take for a short sale to close? * Varies widely. Banks quote 45-90 days to get a decision. Then closing period. I've seen short sales get approved in less than 30 days and some take over a year+. 

What's an Approval Letter and why is it necessary? Since the investor is taking a loss it needs to be an approved transaction. The approval letter states the approved terms in detail. 

What's a "pre-approved price" mean for a short sale? I don't like this term personally and It's likely missused often. Pre approved may be that the short sale was previously approved at a certain price and the buyer walked. This does not mean the same price will be approved again. Also, FHA short sales issue a ATP with a designated NET proceeds required. This is the closet to a pre approved short sale in my opinion.

How can I get around a deed restriction on a short sale? You don't. 

Can I assign or do a subject-to on a short sale? Not supposed to. Bank won't let you assign. You can't do a subject to on a short sale ( that doesn't make sense. ) You can do a subject to on an underwater property, this may make sense in limited situations. 

How does a short sale mitigate 1st, 2nd and 3rd mortgages? Settle the debt in full or partially. 

Why do I need to list a short sale with a licensed agent? Or, can I FSBO my short sale? Needs to be listed on MLS per almost all investor guidelines.

Why should I look into short sales for adding to my investment portfolio? Great way to potetially pick property's up at a discount. 

Can I short sale my rental property? If eligible, yes. 

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  • Brett Goldsmith
    Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes
    10y

    How long does it take for a short sale to close? * Varies widely. Banks quote 45-90 days to get a decision. Then closing period. I've seen short sales get approved in less than 30 days and some take over a year+. 

    What's an Approval Letter and why is it necessary? Since the investor is taking a loss it needs to be an approved transaction. The approval letter states the approved terms in detail. 

    What's a "pre-approved price" mean for a short sale? I don't like this term personally and It's likely missused often. Pre approved may be that the short sale was previously approved at a certain price and the buyer walked. This does not mean the same price will be approved again. Also, FHA short sales issue a ATP with a designated NET proceeds required. This is the closet to a pre approved short sale in my opinion.

    How can I get around a deed restriction on a short sale? You don't. 

    Can I assign or do a subject-to on a short sale? Not supposed to. Bank won't let you assign. You can't do a subject to on a short sale ( that doesn't make sense. ) You can do a subject to on an underwater property, this may make sense in limited situations. 

    How does a short sale mitigate 1st, 2nd and 3rd mortgages? Settle the debt in full or partially. 

    Why do I need to list a short sale with a licensed agent? Or, can I FSBO my short sale? Needs to be listed on MLS per almost all investor guidelines.

    Why should I look into short sales for adding to my investment portfolio? Great way to potetially pick property's up at a discount. 

    Can I short sale my rental property? If eligible, yes. 

    1Reply
  • Jennifer KinzlePro Member
    OP
    Real Estate Agent · Elgin, IL · Member since 2015 · 100 posts · 41 votes
    10y

    @Brett Goldsmith Thanks Brett.  Do you get any other types of questions asked about short sales?  What am I missing on my list?

    0Reply
  • Christopher Thomas
    Rental Property Investor · Los Angeles, CA · Member since 2016 · 5 posts · 4 votes
    10y

    Where is the best information I can get quickly to understand short sales .... I have been offered a short sale on a 4plex, run the numbers and it looks like a good single or double (not a home run) which for me is fine but i have no experience in this area.

    0Reply
  • Jennifer KinzlePro Member
    OP
    Real Estate Agent · Elgin, IL · Member since 2015 · 100 posts · 41 votes
    10y

    @Christopher Thomas Try this California website:  Short Sales in California

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  • Christopher Thomas
    Rental Property Investor · Los Angeles, CA · Member since 2016 · 5 posts · 4 votes
    10y

    Thanks Jennifer

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