With the foreclosure epidemic in full swing, A lot of real estate investors are finding themselves more and more in the realization that one of the more profitable methods of going about their real estate investing business is to do short sales.
Problem is, short sales are complicated. In fact, they're downright diffucult.
Regardless what guru say about foreclosures being painted in bad light or about it being overly criticized for its inherent complexity as compared to more straight forward investing methods such as flipping and retailing, and that short sales are actually a lot less complicated than most people think of it, fact remains that doing short sales is something that you can learn in the fly and apply in a specific and relatively fixed 1-2-3 procedure.
Let me show you what I mean.
Listed below is a list of the steps involved in doing short sales. But before that, let me make a disclaimer. These steps are not all inclusive in the sense that these may vary mostly depending on the home, the state, the bank, the level of distress that the seller is in and a whole bunch of other factors that play into the short sale deal negotiation.
1)Determine the Value of the Property -
2) Figure Out the Lenders Broker Price Opinion (BPO) -
This is one of the hardest parts of the short sale negotiation process in the sense that your FMV should be as close as possible to the lender's BPO. Too much of a difference between these two values and you can practically say goodbye to your short sale profit.
Understandably, the banks Brokers Price Opinion would normally be lower than your FMV. However, you cannot simply rely on this generalization. You have to come up with an FMV as close as possible to the lender's Brokers Price Opinion if you hope to have your short sale approved.
That having been laid out, this is one tough mind-guessing game.
How much profit will I make? Is it commensurate to the amount of work I put into the deal? Will I be willing to go through another round?
Again, these steps are not all-inclusive. The steps vary mostly depending on the deal, the bank, the amount owed on the property, the level of distress that the homeowner is in and a lot more.
Now you know why short sales suck has developed into quite a cliche' among real estate investors.
But, don't get me wrong.
Short sales in this present economy, is a true gold mine as foreclosures are occurring left and right.
Luckily, a number of firms and companies have begun offering 'short sales done for you' services, wherein for a set fee or a percentage, depending on the type of deal, real estate investors simply submit a potential short sale lead to these companies and then they'll be required to submit certain documents which are readily available through the sellers themselves and then the third party company does the rest. The investor simply waits for the short sale to be approved and for it to be closed.
We offer a very similar service for short sales. You don't have to be confused or frustrated with the short sale process we take care of it all for you. We will teach you how to find the deals then you simply turn it over to us and just wait to cash your check.
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