What is Short Sale?

In a nutshell, a “short sale” is negotiating with a mortgage holder to accept less than what is owed as payment in full.

A short sale is my favorite strategy when I have a distressed homeowner who owes the bank close to or more than what the property is worth.

Here’s how it looks: The homeowners owe $200,000 to their first mortgage holder and the payments are in arrears. Their property is worth $200,000 in retail condition. With the proper negotiating strategies, you get the bank to accept $100,000 as payment in full. Therefore, purchasing a $200,000 retail property for 50% of its value. Sweet, huh?

With proper negotiations you can take deals that most investors pass on and turn them into amazing deals. There is a lot of controversy surrounding short sales. Many investors state that banks don’t do them or that you can’t get good deals any more.

The key to successful short sales is to build a great case and a replicable business. When you get a short sale accepted, do something nice for the bank representative. Take the time to build relationships within the banking industry. Building these relationships will insure your success. At some point, you’ll be able to call the reps and simply make your offers verbally. Once the offers are accepted, the rep will tell you what to send.