Short sales are one of the most recognizable terms in the real estate industry, more prevalent then it was just 3-4 years ago.  Yet a number of investors don’t have the patience and stamina it takes to purchase a short sale.  The average short sale takes approximately 3 months from beginning to end.  Investors with all cash are usually ready to move on a property immediately and when a better deal comes around, they jump on it and drop the short sale.  This is normal and why a number of pre-foreclosureproperties end up becoming REOs, Real Estate Owned properties or properties taken back by the lender.  In 2008, Fannie Mae found that for every one short sale that closed, eight homes went into foreclosure.  This speaks to the difficult nature of the Short Sale process and the backward nature of how lenders handle them.  But there is light on the other side, we just have to look in the right places. 

In order to fully optimize your short salepurchase, you want to contact the homeowner directly vs going through an agent that’s listing a property.  I am in no way discouraging the use of Realtors.  But there is a place for agents and we will touch on this shortly.  Once you’ve contacted the homeowner and establish that they are willing to sell and the property is in pre-foreclosure, you want to hire a loss mitigation specialist.  Loss Mitigation Specialists can be anyone assisting in the controlling of loss for the asset in question.  Banks have a Loss Mitigation department that handles debt negotiations such as short sales and loan modifications.  The loss mitigation specialist that you hire to negotiate your short sale purchase will have direct contact with the bank’s loss mitigation department and thus negotiate back and forth till agreeable terms are met.  Normally when you purchase a listed property, there are two agents that negotiate with each other.  Likewise when purchasing a short sale, you want to have two similar entities negotiate, two loss mitigators, not a loss mitigator and a Realtor.  This isn’t an equal playing field!  You want to have a negotiator that is on the same playing field as the lender’s negotiator.  Realtors are still utilized to list the property because nearly all lenders today require that their short sale properties be listed before submitting an offer.  A number of Realty firms are hiring loss mitigators to outsource their short sale negotiations.   

Loss mitigators can get the short sale negotiation completed much faster then the average Realtor, because they are specialist and understand the business.  Most of these mitigators have established relationships with lenders and know exactly what the lender requires to get a short sale approved fast.  Short sales are about negotiations and understanding.  If you have a good negotiator that understands the short sale process, then getting a good discount on the purchase price is definitely feasible.  But if the lender doesn’t allow for the type of discount you are searching for, then the only thing you’ve lost is very little time if any because the loss mitigation specialist is the one that has spent time talking with the lender.  For more information on short sale negotiators, please visit 1st Choice Loss Mitigation.  These are the negotiators I use for my short sale deals. 

Till my next post!!