Short Sales are Motivated Sellers who are Upside Down on Their Mortgage

  • Is when a seller is upside down on their mortgage. They owe more than they can receive from a sale. Thus the Short Sale or discounting the mortgage to allow a sale to happen without the seller having to come out of pocket to pay the difference owed to their mortgage company.
  • Can usually only be done when the owner is having a hardship in making the mortgage payment and the debt is real close to the value. Especially when repairs are also needed. Some lenders may require that the loan must be delinquent at least 30 days. This is when the loan is placed with the loss mitigation department. This department reviews alternatives to foreclosure with defaulted borrowers.
  • The lender will also require some documentation of the owner’s inability to cover their financial obligation. Such as Tax returns, hardship letter, financial statement, bank statements, seller net out sheet, etc. This is called a Short Sale package that you order at the onset of beginning the Short Sale process.
  • A Short Sale is simply discounting what is owed on a mortgage with the lender to make the numbers work for you on a deal.

For example:

____ $100,000 Value
|      |
|___|  Needs  $7,000 in repairs
|      | $90,000 First Mortgage
|      |
|      |
|      |
|      |
|___|

$3,000 is not enough equity to make this deal. So you offer the seller the opportunity to discount the mortgage or perform a Short Sale, to reduce the second enough to make room to cover cost, and your profit. Typically, a lender will want to be paid off completely, no financing, to agree to a Short Sale.

I am happy to work with Apprentice Partners on putting together short sale deals, which of course works best with people facing financial distress. It provides a solution and relief to their problem.  I teach you how to find them, get their phone number and let me make the call with you listening and learning.

 

 

September 26, 2017

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