With the foreclosure rates as high as they are today a lot of borrowers and investors are looking for a way to rescue their credit and get out of their homes or investments without completely breaking the bank. When in reality, breaking the bank is what they should be doing!

Let’s first go over the foreclosure progression or timeline. The first step of foreclosure is referred to as pre-foreclosure. This is the time period when the homeowner starts to miss payments on their mortgage. After a number of payments have been missed, typically 3 months or 90 days, a notice of default or lis pendens is issued to the home owner. This marks the conversion from pre-foreclosure to full on foreclosure. During foreclosure, the bank will set a date to sell the house at a public auction. This time period varies drastically between different states and different banks. Once the house goes to auction, if no bidders are found for the home, the bank takes over the goods and it becomes a REO (Real Estate Owned) Property. Short sales are most common during the foreclosure stage but can occur during pre-foreclosure as well. It’s very important to understand the Short Sale Procedure.

You might be asking yourself: Why would the lenders accept a markdown on their loan? Banks are not in business to own real estate, they are in the business of arbitrage and because of this they will accept considerable discounts on properties so they don’t have to take them back on their books. Also, for every non-performing asset on a bank’s books, they have to keep cash reserves of seven times the value of the non-performing asset. In order to get a short sale offer approved, you need to follow a step by step process. Below I will outline what I feel are the necessary steps required to secure a rewarding short sale deal which is then wholesaled to an end buyer.

Step 1: Pinpoint Sellers
You need to find leads of homes that are currently in distress. This means they are in either pre-foreclosure or foreclosure. You can pay companies to generate these leads for your or you can do the marketing work and find the leads yourself.

Step 2: Judge the Deal
Just because you will be picking up this property for a discount on the current mortgage, doesn’t always mean it will be a acceptable deal. Short selling is an acquisition strategy. Just keep in mind that everything else still needs to be in place once you have the property.

Step 3: Seller Sign Documents – Acquire the Deed
You should meet with the home owner at a title company and go through the necessary paperwork required in order to get started. It is very important to get the deed so you have legal standing in the deal.

Step 5: Submit an Offer to the Lender
This is a very important step in the short sale process. If your offer isn’t perfect, the loss mitigation specialist assigned to your file will simply place it at the bottom of their stack. That is the last thing you want to happen! Their stacks are VERY large and it could take weeks or months before they get back to your file.

Step 6: Schedule a BPO with the Lender
The bank will require a BPO (Brokers Price Opinion) to be performed on the property in order to establish a current fair market value for the property. This BPO agent works for the bank but will do their best to establish a fair price for the house.

Step 7: Keep in Touch with the Bank
It is important to consistently keep in touch with the bank and make sure they have everything they need. The saying goes; the squeaky wheel always gets fixed. Keep in mind, the loss mitigation specialist’s time is valuable. So, in your follow up make sure not to waste their time.

Step 8: Promote the Property
In order to insure a prompt turn around on the property it is important to begin promoting for the property during the negotiations with the bank. At the same time, make sure the future buyer is fully aware that the sale of the house is dependent on the acceptance of your offer to the bank.

Step 9: Acquire a Payoff Letter from the Bank
This is the letter from the bank accepting your offer to purchase the property and payoff the loan.

Step 10: Accept an Offer on the Home
Now that you have the banks approval you can accept an offer from a new buyer. This is where your due diligence will come into play along with your exit strategy. There will be more steps in the process if you are planning to fix the house yourself instead of wholesaling the property.

Step 11: Schedule the Closing with the New Buyer
You need to close with both the original home owner as well as the new end buyer. In some states this can be done with a double close, but in other state the double close is no longer allowed.

Step 12: Cash the Check
Now that your deal is complete, hopefully everything went according to plan and you can deposit a sizeable check into your bank account! It’s very important to know that there is substantial risk with Short Sales and not all deals go according to plan.

This is a very broad stroke of what goes into a Short Sale deal. If you would like to learn more about short sales and see examples and strategies put in place on actual deals, feel free to contact me at aaron@embracevision.com or visit my website at www.embracevision.com.

Fetch useful things to know about the topic of Christian jewelry – go through the web page. The time has come when concise info is really within your reach, use this opportunity.