Thread: Short Sale or Foreclosure?

Short sale is what they own, or they say they own. Pre-foreclosure is dealing with the owner still, who is behind payment.
There is no better than the other. You just need to compare the deals out there...

In the short sale game you must be ready to negotiate with the home owner first and then the mortgage company second. The quickest way to get the home owners attention is to promise them part of any equity in the home. Do some reasearch...it is a very lucarative business.

You can always negotiate a better deal on a Short-sale vs. Foreclosure. If the bank owns the property, it cost them a lot in legals to get the owners out. Usually about $30k. Banks are not a negotiable on a Foreclosure.

Short Sale deals take months to negotiate but the banks does not have to pay all the legals and the investor ("Seller" who actually owns the note) is making the final decision. They don't want the house back either.

Generally 20% below market value is almost always a done deal. Asking for more, you better be paying cash with no contingencies.

The "owner" should not care what the house sells for, they cannot benefit from the proceeds.

I take Short Sale listings at 10% below market value, 8% commission and 5% price reduction each week until we get a contract. Then the wheeling and dealing happens.

Agents who have never negotiated a short sale, should work with a seasoned agent and solid negotiator. You need to support your price with the bank or owner of the note. Do all their work for them, pictures, comps, etc...

As I said, it could take 2-5 months to get an answer on an offer. The loan servicer is probably handling 500-1000 cases. If you are missing 1 piece of paper, your file goes to the bottom.

For buyers, be prepared to wait, and do not expect your "low ball" offer to be accepted. The bank will always start negotiating, first commissions, then price. Be prepared to come up a bit on your price. The banks or whoever is negotiating for the "owner of the note" wants to be able to go back and say they got a higher price, and lower commission. Win-Win...

Remember I said I take the commission at 8%? Well the bank almost always chops it to 5% or 6%. If you take the listing at 5%, be prepared to get killed.

It's all about give and take. A well executed dance routine. Always be nice to the bank or whoever is negotiating!!!!!!!!!!!!!!!!!!!! Never demand anything, cop and attitude, or complain. it will backfire on you.

Sorry for the long post, but all important info.

Jmartin1970. Sorry, a Short Sale is when there is NO equity in the home. The owner is selling for LESS than what is owed to the bank. Called a "Shortage". If there was equity, the seller would be better off just selling for what they owe if that is possible to avoid credit issues and walk away.

Short Sale is always a better alternative to foreclosure for a seller. It does not show up on the credit as a foreclosure. The only negative tradelines are the missing mortgage payments for 2-5 months. It only take 24 months to clean up your credit.

Foreclosure will almost always kill your ability to ever own a home again.

Because of Fed pressure, banks are very negotiable with owners right now. There is almost no reason anyone should be foreclosed on.

Originally Posted by REbuyersgroup

Jmartin1970. Sorry, a Short Sale is when there is NO equity in the home. The owner is selling for LESS than what is owed to the bank. Called a "Shortage". If there was equity, the seller would be better off just selling for what they owe if that is possible to avoid credit issues and walk away.

Short Sale is always a better alternative to foreclosure for a seller. It does not show up on the credit as a foreclosure. The only negative tradelines are the missing mortgage payments for 2-5 months. It only take 24 months to clean up your credit.

Foreclosure will almost always kill your ability to ever own a home again.

Because of Fed pressure, banks are very negotiable with owners right now. There is almost no reason anyone should be foreclosed on.

Actually, one of my first short sales had equity by the time I was done with the bank (my specialty) and keep in mind I am talking ARV equity..lol Many people do not understand that once a person is behind on house payments...they cannot get a 2nd on their home, they cannot do much needed repairs in order for the home to sell. Maybe you could share other ways of finding short sales that I am not aware of??

it is true about the other postings here in relates to foreclosure. if you are an investor or a buyer on that property, the disadvantage of that is having a negotiation with the bank - for example, closing costs. Bank is very strict of contributing money in closing. How-ever, most bank hire a real estate agent who would market that property but take away some commissions at the end. correct me if i am wrong? regardless, if you hire an agent, it can be an advantage for you to help you in some closing costs.

We get 100's of BPO's every month and increasing. BPO's are Broker Price Opinions and ordered by the lending institutions when a property falls behind in payments. The lenders want to know what the value is.

These almost always fall into Short Sale or Foreclosure. So we know who is a listing candidate for Short-Sale.

The average "investor" would have to pile through all the Lis-Pendens, make contact and hope for the best.

Thats the best way to find deals!