Jerry Z's Real Estate Resources

A place for real estate buyers, sellers and investors

What is a short sale?

A short sale is when a lender accepts payment for a mortgage that is less than what the homeowner owes. The homeowner is “Upside Down” or “Under Water”.

Why Short Sales Happen…

Banks have to pay foreclosure expenses to take the home (5-10K). Once they take it, they pay for repairs and fix-up, ongoing maintenance, hazard insurance, property taxes and human resources costs (5-10K). When they attempt to sell it, they pay for closing costs, commissions (15-30K) …Total 50K

12 short sale lender factors and helpful hints

1. Keeping the number of non-performing loans on their statement to a minimum
2. Doing a short-sale during a non-performing grace period keeps the loan on the asset side instead of the liability side of statement
3. Get to know third-party investors like fannie mae and Freddie mac, who often hold the note on the loan
4. Freddie Mac will approve a short sale that is 90-92% of the BPO. It takes 2-3 weeks to get a BPO ordered and processed once packet is submitted.
5. Deal directly with Freddie Mac, and understand how their short sales work, to get properties well below market value
6. Order the BPOs yourself and make yourself the contact. Show up to meet the BPO agent to bring them comps if they are receptive and to point out any/all circumstances and repairs helpful to your cause
7. Estimate cost of repairs to property to drive down offer price
8. Low ball repaired value
9. inflate cost of securing and maintaining property
10. inflate holding costs and time.

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