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10 Frequently Asked Short Sale Questions
1. What happens to the seller's credit rating when they allow an investor to short sell their property? What typically happens is the loan will show up as "paid" on their credit report; however there will be a notation that says "settled for less than originally owed" or something along these lines. It is more favorable for a homeowner to short sell than to have a foreclosure on their credit report. 2. Where do you find investors for Short Sales? Depending on where you live, you may see investors who advertise with bandit signs or in your local newspaper. Call the investors directly and ask them if they are experienced in doing short sales and if they would be interested in working with you. Another good place is your local real estate investors club meeting. 3. Define Short Sale? A short sale is really a form of pre-foreclosure sale and occurs when the mortgagee agrees to accept less than the loan amount to avoid foreclosure. A negotiated short sale results in a discounted purchase price for the buyer. The buyer would finance the acquisition much the same as in any conventional realty acquisition... but without the luxury of time. 4. Can an owner profit from a Short Sale? The seller cannot profit (monetarily) from a pre-foreclosure short sale..But there are always exceptions to the rule. 5. How do bankruptcies affect the possibility of doing a short sale? Most mortgagees won't consider a short sale if the homeowner is in bankruptcy...why? Because negotiating a short sale payoff is considered a collection activity. Collection activities are prohibited in bankruptcy. 6. Can somebody tell me what documents do I have to include in a Short Sale package? Documents depend on the lender. Each lender has different requirements. It is typical to require hardship letter, purchase and sales contract, ECOR,settlement statement (HUD 1), net sheet, pay stubs, bank statements,personal financial sheet (monthly budget), amongst other things. 7. What percentage of mortgage companies send someone out for an appraisal on a possible short sale? All lenders order a BPO or full appraisal of the property before making their decision to accept or reject the short sale offer. This is there only way of assessing the value of the property. 8. How late in the pre-foreclosure process can you start a short sale? Try to allow a window of at least 90 days to effectuate a mortgagee approved, pre-foreclosure short sale. 9. What is a Due on Sale Clause? "Due on Sale" Clause (DOS) Provision in a mortgage or deed of trust calling for the total payoff of the loan balance in the event of a sale or transfer of title to the secured real property. A contract provision which authorizes the lender, at its option, to declare immediately due and payable sums secured by the lender's security instrument upon a sale of all or any part of the real property securing the loan without the lender's prior written consent. For purposes of this definition, a sale or transfer means the conveyance of real property of any right, title or interest therein, whether legal or equitable, whether voluntary or involuntary, by for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests. Standard language which states that the loan must be paid when a house is sold. 10. Will banks allow a short sale when the owner has some or a good amount of equity? If a property has what the lender would consider a substantial amount of equity, chances are they would consider allowing the property to foreclose and then reselling it closer to the retail value. Focus on homes that do not have much equity. Your job will be to create the equity in the home by negotiating a successful short sale. Mr. Fowler has been a real estate investor for over 15 years specializing in the area of pre-foreclosure/short sale investing. He has bought and sold over 200 homes in Georgia, Florida, Louisiana, and Tennessee using the same short sale techniques that he teaches in his course, Making Money with Short Sales: The Complete Guide to Acquiring Property Pre-Foreclosure. Mr. Fowler currently resides in Atlanta Georgia. He also spends many hours per month teaching his creative real estate investing techniques to other aspiring investors across the country.
MORE RESOURCES: Rules that helped set real estate agent commissions are changing. Here's what you need to know The Washington Post Landmark Settlement Breaks Up the Real Estate Cartel The American Prospect Top real-estate CEO sees decades of housing pain ahead: 'What the Fed did will have a 30-year tail on it' Yahoo Finance Five Ways Buying and Selling a House Could Change The New York Times Rules that helped set real estate agent commissions are changing. Here's what you need to know The Associated Press Real estate commission change shakes industry's foundation University of Miami: News@theU Seabold Construction Ties Demise to Dispute with Real Estate Developer Engineering News-Record Investigation underway after 44-year-old real estate investor seen on video firing shots off boat docked at Lakeview ... WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale Local real estate agents face uncertain future with new negotiation rules WJHL-TV News Channel 11 The Realtors' Big Defeat The New York Times Central Texas housing experts talk impacts from $418M real estate settlement - 25 News KXXV and KRHD Central Texas housing experts talk impacts from $418M real estate settlement 25 News KXXV and KRHD Refined Real Estate: Historic Queen Anne Polson House lists for $6,950,000 seattlerefined.com What National Association of Realtors agreement means for Texas real estate KAMR - MyHighPlains.com Rules that helped set real estate agent commissions are changing. Here's what you need to know KXLY Spokane CrewBaltimore’s mission to accelerate women’s success in real estate Afro American Newspaper A luxury agent on how the NAR settlement will change his business The Washington Post National lawsuit could shakeup housing market, cut into real estate agent commission 11Alive.com WXIA What Seattle-area homebuyers should expect after national settlement The Seattle Times Swimmo Invest Opens up a New Chapter in the Real Estate Industry Markets Insider Cities Face Cutbacks as Commercial Real Estate Prices Tumble The New York Times Settlement will affect Iowa homebuyers KCCI Des Moines Once America's Hottest Housing Market, Austin Is Running in Reverse The Wall Street Journal Realtor group will pay $418M to settle commission lawsuits The Associated Press Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star Realtors Reckon With a Seismic Shift to How They Get Paid The Wall Street Journal Israeli real estate event: Legal complaints escalate NorthJersey.com Foreclosures Are Rising—Especially in This One State—but Not for the Reason You Might Think SFGATE Chicago Voters Face Choice on Tax to Fund Homeless Programs The New York Times Real estate lawsuit settlement upends decades-long policies that helped set agent commissions WQAD Moline What the death of the 6% real estate commission means in D-FW The Dallas Morning News Rules that helped set real estate agent commissions are changing. Here's what you need to know KOB 4 Real estate commissions, unassailable for decades, could crumble after landmark settlement The Denver Post Is the Era of the Celebrity Real Estate Agent Over? Industry Reacts to Settlement That Could Slash Commissions Hollywood Reporter China's Real-Estate Market Just Set a Record—but Not a Good One The Wall Street Journal Changes could be coming to fees related to home buying process Fox 46 Charlotte Bay Area Real Estate Executive Charged with Wire Fraud, Identity Theft in Investment Scam - Hoodline Manhattan Real Estate Update westsiderag.com National Association of Realtors Agrees to Slash Commissions to Settle Lawsuits - The New York Times The NAR Settlement's Impact On Commissions And Home Prices Financial Samurai Pension funds snap up real estate at steep discounts Financial Times Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes The Wall Street Journal Rules that helped set real estate agent commissions are changing. Here's what you need to know Antigo Daily Journal A commission settlement may affect housing market 9News.com KUSA Agent Migration and the Power of New Mike DelPrete End of 6% real estate commissions could mean lower home prices The Atlanta Journal Constitution Artis Real Estate Investment Trust (OTCMKTS:ARESF) and Armada Hoffler Properties (NYSE:AHH) Financial Analysis Defense World A Look Into the Future of Home Buyers' Agent Commissions The Wall Street Journal National Association of Realtors to cut commissions to settle lawsuits. Here's the financial impact. CBS News Antitrust ruling rocks real estate: Buyers brace for shift in commission structures Straight Arrow News Blackstone, World's Top Alternative Asset Manager, Eyes Record Highs Amid Real Estate Bottom Investor's Business Daily 4 ways buying a home in D-FW may change after landmark Realtors settlement - The Dallas Morning News 4 ways buying a home in D-FW may change after landmark Realtors settlement The Dallas Morning News 4 Ways a Settlement Could Change the Housing Industry The New York Times Commercial Real Estate's Systemic Threat: Separating Fact From Fiction Commercial Observer Real Estate Stocks Drop As NAR Agrees to $418 Million Settlement Markets Insider |
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