Below are some frequently asked questions that we answered to help you. If you feel that your queries have not been addressed, feel free to contact us.
1. What happens to the seller’s credit rating when they allow an investor to short sell their property?
What usually happens is that the loan will show up on their credit report paid off, except that there will be a note on the credit report stating that it was settled below was originally owed. “Short sale” looks better than “foreclosure” on a homeowner’s credit report.
2. Where do you find investors?
One can find ads in newspapers, signs or on websites like Craigslist. When calling an investor make sure that they have experience doing short sales.
3. Define Short Sale?
A short sale is the act of selling the home before it is foreclosed upon; the owner agrees to sell the house for less than the loan amount to avoid foreclosure. It’s similar in many ways to a regular sale of a house but without the large amount of time associated with it.
4. Can an owner profit from a Short Sale?
It is very rare for a seller to profit from a short sale, but not impossible.
5. How do bankruptcies affect the possibility of doing a short sale?
Short sales are considered a “collection activity” which are prohibited by bankruptcies.
6. Can somebody tell me what documents do I have to include in a Short Sale package?
Documents depend on the lender. It is typical to require a hardship letter, a purchase and sales contract, ECOR,settlement statement (HUD 1), net sheet, pay stubs, bank statements,personal financial sheet (monthly budget).
7. What percentage of mortgage companies send someone out for an appraisal on a possible short sale?
All lenders will order a BPO or full appraisal of the property before making their decision to accept the short sale offer. This is the only way of assessing the value of the property.
8. How late in the pre-foreclosure process can you start a short sale?
90 days allows a proper window to get an approved short sale.
9. Will banks allow a short sale when the owner has some or a good amount of equity?
If a property has a good amount of equity then the lender would consider allowing the property to foreclose and then reselling it. An investor should try to pick properties with little equity and create more equity by negotiating a short sale.
