It seems that everywhere you turn these days, people are talking about the money to be made in real estate investing through the short sale process. But when it comes to the pre-foreclosure market, the legalities of closing a short sale can be a time consuming and demanding process.
One fundamental part of constructing a short sale is the process of putting together a complete short sale packet. It can be a daunting process until you learn it, but after some practice, the short sale becomes a smoother process.
Here are the basics of the complete short sale packet:
1) Don't assume the paperwork is the same from lender to lender. Almost all lenders have different paperwork requirements, so your first step would be to contact the lender you are hoping to do business with and find out what is required for a short sale. Be aware that most of the time, in order to even get this information from the lender; you will have to present them with a signed Letter of Authorization from the homeowner.
2) Have the homeowner compose a letter of hardship, which details to the lender exactly why they have fallen behind on payments and why they can no longer continue to pay the mortgage on the property. They will also need to enclose two months of bank statements and pay stubs, along with tax returns for the previous two years.
3) You will then need to draw up a purchase and sale agreement, proving to the lender that homeowner does wish to sell you their home.
4) Next, you'll fill out a financial form indicating the financial situation of you, the borrower. Basically, you will have to disclose to the lender how much money you make each month, as well as give a breakdown of your complete monthly expenses, from housing, gas, groceries and entertainment.
5) You'll also want to compile a "comp sheet," comparing this house to other comparable properties, to prove that the price you are willing to pay is fair. This should also include any estimates from contractors you've spoken to about repairs on the property.
6) Finally, the lender will also want to see a HUD1, or a "net sheet" as well.
After these paperwork requirements are complete, you'll then be able to move into a more active negotiation phase with the lender.
Although, as noted earlier, different lenders have different requirements, these are some of the more basic steps in the short sale process, but for investors who are looking to have more free time to deal with their investment properties, a new trend has arrived in the form of short sale outsourcing.
A good outsourcing company can make the job easier because they already have the contacts and relationships at various lenders, and can close a short sale faster. Outsourcing your short sale is an excellent way to step away from the stress of negotiating short sales and have a team of investing experts working on your behalf to get you the properties you want.
Author Resource:-
The Short Sale Formula provides a step-by-stop formula to show real estate investors how to put together a short sale packet, outsource short sale files, conduct back-to-back closings and finance short sales once they are complete. The Short Sale Formula is owned and operated by SaveMeFromForeclosure.com, LLC.
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