Short sales are real estate deals that happen when a home owner is in foreclosure, usually three payments behind, and you, the buyer, offer the bank less on the mortgage than is actually owed. And hopefully, the bank accepts. Short sales take longer to get an agreement on a purchase price than a sale involving only the seller, but it is possible to get deep discounts from the bank when you buy a property before it goes to the sheriffs sale. You must be patient with short sales because extra people have to agree on the purchase price. However, the payoff is a higher profit with much nicer houses being bought and sold. For instance, my first short sale involved a lot of patience, a lot of effort and a lot of positive thinking. I was buying a wholesale deal from another investor/friend. It was a short sale he was working on with the bank. I told him I wanted to go with him when he talked to the seller. I asked for copies of all the paperwork that he and the buyer signed. The investor did all the talking with the bank. It was therefore up to the investor to get the bank to agree to this deal. He knew I had to get it closed by a certain date as I was buying the house via a 1031 tax exchange. That meant that there was a deadline--a government deadline--to get the bank to agree to the deal in order for me to get my tax exemption. If I missed it, Id pay tax on the sale price of the house Id sold six months earlier. As you can imagine, my motivation was high to get this deal done on time. Fortunately, I had responsible, dependable people on my house-buying team. I knew I could count on them to come through for me in a crunch. And I did what I needed to do. I got copies of all the paperwork. I noted all the important phrases that needed to be included for the future short sales I wanted to do. Then I waited. Without much patience. I called the investor. He was working fast and hard, but he didnt have an answer. The bank was slowing things down, not him. Even so, I reminded him of my deadline for the tax exchange. I also made sure he was communicating with the bank. In the meantime, I kept working. I called the exchange company to let them know the tight time table. I prepared my title company and had them do a title search prior to the deal being accepted. I called the insurance company to get hazard insurance on the property. And I got money from my private lender to close the deal. With time running out, I had all the pieces and players in place. Then, with just a day and a half left to close, the bank finally agreed on a good purchase price. Now the only remaining detail was to get the seller, Joe, to sign the closing documents. Joe had been helpful throughout the process, but he was working a double shift and couldnt get away. So I got creative. I asked if we could come to him. He said we could. The women from the title company and I met Joe at his place of employment at 11:30pm on the final day of my tax exchange. We had thirty minutes to get the papers signed or my tax exchange expired, costing me my tax deferment. We pushed. And made it happen with nineteen minutes to spare. Joe, now relieved of all his home owner duties, had the biggest smile of all. Short sales are truly a win-win for all involved. It was stressful but exciting. This became the first of many short sales in my new career. You can do it, too. Be persistent. Be positive. Be proactive. You WILL succeed. |
