Short Sale Checklist For Investors
Here is a Short Sale Checklist for those who need the step by step blueprint of what to do next. This is assuming you’ve found a property that is a candidate for a short sale.
1) Meet with Homeowner and Determine Value of Property – make sure they understand what you are doing and willing to cooperate with you during the whole process. It can take months before a short sale is approved and the homeowners need to cooperate the whole way through.
2) Know your Exit Strategy – do you plan to keep the property, rehab it or flip it to an end buyer. Depending on what exit strategy you use, the process will be a little different and financing plays a big part in knowing your exit strategy.
3) Sign Paperwork – Authorization Form, Disclosure Form, P&S Agreement & Escrow Letter
4) Fax Authorization Form to lender(s) and wait 24-48 hours – Get direct number and email of person handling account.
5) Request Short Sale Packet – It may be online so you can grab it on the lenders website if you don’t have a fax machine or they can email it you.
6) Check Title – Depending on your relationship with the title company, you may be able to do this for free. This is a preliminary title report.
7) Complete the Short Sale Packet – The lender has certain requirements that are needed and then you will send EVERYTHING back to lender. This is a critical piece to getting a short sale done quickly and efficiently. The majority of mistakes from rookie investors are made because they don’t send the lender all the documents they require. If there are certain documents that cannot be provided, it’s important to send an explanation of why you can’t provide such document. You can also include supporting documents if it helps to build your case.
8) Start looking for end buyer – put a for sale sign in the yard if the home is in a good location with lots of traffic.
9) Follow up – with bank (daily/weekly), let them know they are to contact you and don’t give up.
10) Meet the appraiser for the BPO, show up with supporting documents – This is another critical piece. It’s so important to meet the appraiser at the home. Make sure you point out all the flaws. You want the BPO to come in as low as possible so you can sell the property (if that’s your exit strategy) to your end buyer.
11) Find an end buyer – Cash buyer is always the best. There are resources out there that provide lists of cash buyers.
12) Secure Funding – Transactional funding is a great way to use someone else’s money that is not dependent on credit or income. It is only used to flip houses and it’s extremely cheap to use. For rehabs, you’ll need private or hard money.
13) Receive acceptance/payoff letter from lender(s), schedule closings – usually within 30 days
14) Close A-B transaction
15) Close B-C transaction (for quick flip)
16) Deposit money in bank account
17) Do it again!
There you have it. A complete short sale checklist of the things you’ll need to do in order to complete a successful short sale. The process does take time, so don’t give up because the rewards can be phenomenal.