When to Walk Away from a Short Sale
Do you know when to avoid a short sale deal? Knowing when to walk away is just as important as knowing when to jump on a deal, so here are a few tips I’ve picked up along the way.
On a short sale deal, it is preferable that the seller wants zero money or even wants to give you money. There are plenty of short sale deals out there – you don’t need to be working with sellers who want $5,000 or $10,000 or more from their property when they have no equity. No one else in town and no other investor is going to give that to them. If they want that much money now, just wait a few days and they’ll be coming back to you and wanting zero. They will talk to some other people and realize that they’re not getting what they’re looking for.
To sum it all up, you want a seller that will cooperate with you throughout the entire short sale process and will give you and sign any documents that you need. This is very critical. From the very beginning if the seller is not going to cooperate with you, then forget it and move on to the next seller. Don’t waste your time!
I addressed this in last week’s posting, but the second major factor in whether or not you should work on this short sale deal is to know how much work the house needs. I know it may be scary, but it’s good if a house needs a lot of repairs. If it’s a pretty house with hardly any repairs and it’s not in distress, then your chance of getting a short sale will be very slim; it does happen but it’s rare. There are exceptions — for example, a sizeable second lien on a high-value home can be very motivating when the first lien was foreclosed on. The lender is more motivated to work with you if they’ve seen that there’s a chance their lien will be wiped out as well. Because second liens are more willing to work with you, then your chance of getting a short sale even if the house doesn’t need a whole lot of repair gets better. But generally speaking, you should just avoid pretty houses.
Also, the third thing that is important to know is which lenders to stay away from in the first place. There are lenders that will either not accept short sales at all or they are very tough to deal with and want 95-100% of BPO. You want to stay away from those lenders! You should start compiling a list of these lenders so that you’ll know from the beginning to walk away.
To Fun, Fortune, and Freedom!
P.S. If you don’t already have a list of these tough lenders you should be avoiding, be sure to join me and Doug on the exclusive webinar we’re presenting on Thursday. We’ll discuss short sales in much more depth, and you’ll learn the several steps to take to guarantee that your short sales are approved! Yes, sign me up for the FREE webinar!
This free webinar will take place on Thursday, November 20th, at 5 pm PT / 6 pm MT / 7 pm CT / 8 pm ET. But here’s the catch — you MUST register to attend. And even if you cannot make the live webinar, you have to register to get access to the replay.