In a lot of ways, the basic tenets of short sale transactions have not changed. This includes the fact that your short sale will be done more quickly and efficiently if you are available to the lender in question to help resolve all questions and potential issues essentially before they arise. However, with the combination of a lot of bad press for real estate investors and a lot more lenders doing a lot more short sales – in some markets, short sales make up more than a third of all home sales – has, in some cases, made short sales harder to accomplish for expert short sale negotiators than it might be for someone who appears less “professional.”
This shift is due largely to the fact that new programs and public sentiment imply that lenders are entitled to the majority of the profits made on a short sale, even if those profits come as a result of extensive work outside and after the original transaction is complete. You are probably aware that there are regulations governing how quickly you can flip a short sale and the amount of money you can make over the amount that the lender took for the property. In fact, many lenders now require short sale investors to estimate or disclose the profits they expect to make on the property in the future.
As a result, your short sale investing can get pretty complicated, and it may be frustrating because you are working with a lending body that does not believe that you should be able to use your own skills and talents to make a short sale deal actually work for you. To keep the ball rolling, be prepared to show just exactly how much work – and cost – is going to go into the property after you get in before you can think about selling. This has always been a factor of short sales, but historically many negotiators have been able to make due with a simple BPO assessing the poor quality of the property. Now, you need to also show how much it is going to cost you to restore the property, and how those costs will come out of your profits, essentially driving them down. While all lenders do not have the same disclosure requirements, you should consult a legal expert on the degree to which you should “over-disclose” to prevent yourself from being accused of fraud if you make “too much money” when you do resell the property.
Ultimately, this is your short sale deal. Particularly if you plan to season the property, it is possible that things could change in between the time you purchase the short sale and the time you sell it. However, if you are flipping, you need to work with the lender and your legal advisor to make sure that you are providing all the necessary details to the lender. This transparency will help the lender move your deal through and prevent you from having to deal with nasty complications down the road.
Eric Wanck is a short sale investor/real estate agent located in Atlanta, GA. He works with Nextage Peachtree Realty and specializes in helping homeowners and buyers through the short sale process You can reach him at 770-688-5448 or contact him at http://activerain.com/atlshortsalepro/contact
Interested in knowing more about Nextage Realty? Check out www.brokerageofthefuture.com. For More Great Short Sale Tips and Information Visit FreeShortSaleCourse.com
Comments(0)