We're seeing more and more short sales - pre-foreclosure sales. I just attended a very informative seminar on short sales.
There were some very important points I took from this seminar:
1. The seller MUST be honest - lenders are looking for scams and fraud and they will catch you! The seller cannot receive any money from the sale of the property!! Stay away from anything where the purchaser or the seller asks for money outside of closing via an addendum, etc. THIS IS FRAUD - and you can get into a ton of trouble.
2. Be nice when you are working with a lender's loss mitigation department -- remember, you get further with honey than you do with vinegar. During your first conversation with the loss mitigation department - when you finally get to speak with someone in authority, pump them for information -- get everything you need during this first conversation. Also ask them what is the best way to contact them -- phone, email, fax -- and what time. Generally speaking first thing in the morning is probably the best time to contact them.
3. The lender will be more inclined to work with you if you present a clear, easy to read contract, and submit EVERYTHING in an orderly, neat fashion. Neatness counts!
4. Make sure your sellers are fully informed so they know what to expect. I would also recommend that you make no promises or guarantees - your sellers will appreciate your work, even if you didn't get the property sold before foreclosure if you're honest and do your best for them.
5. Realtors -- Please Please -- tell us it's a "short sale" or "subject to third party approval" -- not only will this give us a better idea of what we're dealing with, but investors are looking for properties and they are searching for "short sale" or "subject to" If your seller's embarrassed to have "short sale" in the listing, explain to them that "subject to third party approval" will alert investors and realtors of this great deal!
6. If you represent a buyer who wants to purchase a "short sale" property -- tell them to expect it to take at least 3 weeks, and up to 12 weeks to get lender approval. It was recommended that an addendum be included giving a time-limit for the lender to respond - that way your buyer can get out of the sale if they find something else better or want to move onto another property. This limit won't be in effect until the buyer exercises this contingency.
I have more on this subject to post later ...
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