short Sales

A "short sale" is when you negotiate a lower than the current balance payoff on a mortgage or land contract. This is a very involved process and far beyond the scope of this book, but we will present an overview here.

When lenders are faced with taking property back through foreclosure, they are often facing substantial losses. These losses include far more than just money lost on the foreclosure and resale of the property. They include paying a staff to manage the foreclosed property, paying attorneys, paying the costs of holding property for months and paying the costs of marketing the property. Lenders are often willing to take far less than they are owed, if it means they get the money now and can stop the expenses that are accruing against the property. There are some circumstances, however, that will determine whether or not they will discount their mortgage.

First, generally lenders will only discount mortgages BEFORE the sheriff’s sale has taken place. Second, they will usually only discount their mortgages upon a hardship request of the Mortgagor, not a third party, and especially not an investor. If they even hear that an investor may be involved, this will usually stop any chances of a discount. There are methods to get around this though.

Since we started working with short sales, we have achieved having mortgages discounted by 20% or more. Especially second mortgages which, upon completion of the foreclosure of a first mortgage, will lose everything, are prime for this process. This has turned many properties that we would normally have passed up into viable investments.

A “Step-by-step guide to filling out the paperwork for a short sale” DVD by Jovan Roberts’ DVD is available at www.stores.ebay.com\Real-Estate-Investing-Guide. For an excellent seminar or home study course on “Short Cuts to Short Sales” by Kimberlee Frank and Hunter Pachall go to:

Short Cuts to Short Sales