Short Sale Ins and Outs

[Matt DuSold]

So I think I have some of the process down but feel lost still. It might be because I feel it should be more complicated than it is.

Get lead then work with the owner of the house. Get all the necessary paper work to make the process move forward. I pretty much know the paper work and its mapped out in “9 keys to short sale success†(I think). I know this sounds stupid but why do you negotiate a price with the homeowner I thought you only negotiated with then bank?

After all that, you get in contact with the bank and start the process with them. Make sure to give them low comps, and a long list of necessary repairs to “de-value†the house. I have seen in other posts you start your offer at somewhere around 50% FMV, is this correct? They will do their BPO and come up with their price and you try to negotiate as low as possible.

After that comes through you have X amount of days (is there a typical amount, like 30?) to find a buyer. You get with a title company, get transaction funding and get your cash buyer lined up and you finish the deal.

Is this it? Am I just making it harder than it is? How often are you able to get short sales under say 60-65 ARV (minus repairs) in order to make enough money off of them?

As you can see I have some spots I’m not too clear on. If you are interested in short sales in Arizona I would be more then willing to find a few deals for a fee and for you to teach me the process.

Thanks in advance!

[Justin S.]

"It's not just sold it's DuSold!"

Hey Matt, long time since I've seen you post.

I have not done any shorts in a while, but when I was doing them I would offer roughly 50% of FMV. If the homeowner is negotiating with you on this, then they probably not motivated and they should stick with an agent.

For finding your buyers, lot of investors have the homeowners sign an addendum that states you can market the property to find an end buyer. Most do not have an issue with this because if you are not able to create a spread, you at least have a backup buyer waiting to purchase the property. You should be marketing for a buyer as soon as you are allowed.

Getting spreads is a lot harder now than it was a year ago, but I believe there are still a few still doing it. Uglier the house the better. If its a track home with lots of comps, it will be hard to get the spread you want and if your end buyer is not cash, it will be hard to find a lender to close within 24 hours.

And always always always disclose to both the homeowner and the bank your intentions. (i.e. you are an investor and you intend to make a profit)

Bottom-line, they are a lot harder than they used to be but people are still doing them.

Good luck and nice to see you back on BP.