FAQ on Short Sales, for investors

[Jennifer Kinzle]

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!

[Brett Goldsmith]

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.