12 Steps You Must Know When Buying A Short Sale Property

1) Locate homes which are in default, as early as possible, even possibly before the formal non-judicial foreclosure begins.
2) Search foreclosed homes with plenty of lead time before the Trustee’s Sale (you may need weeks or months of lead time.)
3) Once you have created short list of such homes, narrow that list to only those homes you would likely purchase for yourself.
4) Complete an accurate Comparative Market Analysis (CMA) using sold homes with similar features, via a good database such as the local MLS.
5) Determine the exact mortgage balance and status of default or foreclosure.
6) Be sure to find out if there is a second or third mortgage on the house.
7) Research the possibility of other liens (tax liens, mechanic’s liens, labor liens, state liens, etc.)
8) Determine how best to talk and negotiate with the loss mitigation department of the bank or mortgage holder (email, fax, phone, etc)
9) Determine whether or not purchasing via the short sale will negate any subordinate loans or liens (another trap for the unwary.)
10) Know which costs and fees in addition to the mortgage balance can be compromised and by how much (experience is the best teacher.)
11) Prepare a comprehensive package to present to the mortgage holder, which is the most critical step in closing a short sale. This should include the Purchase & Sale Agreement, and a thorough analysis of the home, prices, the local market, and justification of your offering price. Your offer must be prepared very professionally or the bank will merely overlook you, without giving your offer a second look. You have to be able to make a case to the bank, as to why they should sell to you at this price.
12) In order to close on a deal in a short sale, you must follow through with all parties involved.