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Step-By-Step Short Sale Process
|Buyers pursue short sales to get a good deal. A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Below is a simple guide that can help home buyers who are interested in buying short sales.
Look for potential short sales
Identify properties that are in danger of foreclosing in your neighborhood. You can refer to online database, legal ads or hire a professional real estate agent as a buyer's agent. The primary step that you have to undertake is to know how much is owed on the house relative to its estimated value. If it is high, it's a good pick since it only signifies that the seller might have problems selling it for enough to pay for the loan. Skip those homes in which the owner have a huge equity in the home because in cases like this the lender prefer to foreclose the property and resell it closer to the actual market value of the house.
2. Visit and examine the property
It is necessary that you will not base your judgment on the pictures that you see on the internet. See the condition of the property for yourself. Make an approximation of how much it is going to take to fix and refurbish the property. If it still needs repair, which many "ordinary" buyers won't consider it, then it is a great advantage to you.
3. Make an in-depth research
Know the current market value of the property. Do you think that this property is a good deal? If you're an investor or even a potential homeowner planning to live in the home for a short period of time, you wish to get profit from the deal.
4. Know all the liens and mortgages
Ask the seller or the seller's agent what liens are involved on the property and know which lender is the main lien holder.
5. Know how you are going to pay for the property
Well, this phase of buying short sales is a critical one. You have to identify how you're going to pay for the real estate property. If you have a good credit score, the present lender may give you a loan. This can speed up your loan application process since the existing lender already has a lot of information of your short-sale paperwork. When getting into short sale transactions, it is important that you know how to move quickly. The lender will normally require closing within 20 days or as soon as the agreement has been made.
6. Contact the lender
It is important that you speak with the loss mitigation department. From your first talk with the lender, demonstrate courtesy and professionalism. You should have sent along written authorization from the borrower for you to get in touch with the lender. Make the first phone call with the borrower to substantiate details with the lender's agent.
7. Complete the lender's short-sale application
Most lenders usually have an application specifically for a short-sale request. Just complete the entire lender's short-sale application. Make sure that you have provided all the needed information.
8. Create the proposal
The proposal commonly includes package of materials plus the application and authorization letter, and:
• The purchase and sale contract,
• A hardship letter
• A statement of the property's value.
• Detail the costs and liabilities.
• A settlement statement.
It is common for lender to reject your offer or to come back you with a counteroffer. Just like any real estate transactions, you must know to set your limits and be brave enough to walk away in case the lender did not meet your figure.
10. Seal the deal
Once you, the seller and the lender concur in an agreement, put everything into writing and document all the transactions. Make certain that the seller comprehends all of the terms and conditions enclosed in the deal. Then right after that comes the closing and the home is yours.
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