Short sales will be critical to the recovery of the housing market. Banks and homeowners alike are relying on the short sale process to prevent the foreclosure tide from swamping the market and the lenders themselves. But as short sales are increasingly regulated and the target of more and more media focus, it becomes increasingly important for short sale negotiators – especially if they are real estate investors rather than the next homeowner – to apply stringent rules for full disclosure to their short sale transactions.
Probably the most straightforward way to handle this disclosure is to include the fact that you are doing a short sale in the contract that deals with the transaction. Do not leave anything to chance. Note that you are doing a short sale, how the lenders will be satisfied and make sure that the contract itself allows for the resale of the property, should you elect to do so. You will be on firmer ground if you decide to “flip” the short sale if both the lender and the seller are aware that you may opt to do this.
In addition, many investors and real estate agents are recommending that you stay in touch with all lenders, even if they are the holders of secondary or tertiary loans and are less likely to get any direct satisfaction from a short sale. Making sure that the negotiation meets everyone’s needs or at least addresses their stake in the property can help prevent lenders from coming after homeowners later for the payoff of the remainder of the investment.
Also if you are listing the property in MLS, you may also opt to disclose the fact that the property is a short sale – or that the owner, lender or both or open to a short sale – in the listing. Not only will this attract more attention to your listing since short sales are generally perceived to be a good way to purchase a property at a discount, but it will also cover your disclosure bases and make sure that there is no question in anyone’s mind that the transaction that you are negotiating is a short sale.
Ultimately, you can create a great deal of wealth, resolve serious financial crises for people in need, and help stem the tide of foreclosures in the country by being an effective short sale negotiator. However, you must be very careful to “dot your I’s and cross your T’s” when you are doing a short sale. Make sure that every aspect of your behavior and your negotiations are beyond reproach to establish the best short sale transactions you possible can and bring satisfaction to every party in the transaction, including yourself.
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categories: real estate, real estate investing, short sale investing, preforeclosure investing
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