Investors can often make a substantial profit during a short sale. Thus, it would be beneficial for them to know the process through which a short sale goes through, from the discussions with the homeowner until the closing of the sale.
First of all, the homeowner must be upside-down in his loan, which means that the market value of his home is less than his outstanding balance in the mortgage loan. Thus, the first step is to determine if this is the situation. The next step is to get the approval of the borrower for the short sale in writing and to make the first contact with the mortgage lender.
The following step is to present the short sale package to the lender. The hardship letter of the borrower will serve as the cover letter and should be complete and convincing enough for the lender. The main body of the short sale package contains the information and the calculations that demonstrate to the lender that it is a good deal for him.
The next step is to prepare the short sale purchase contract that requires certain elements. These include the signatures of all concerned parties, complete property description, a declaration when the homeowner will leave the property, the items that are exempted from the sale, the schedule of the delivery of documents, and compliance with state laws. Contingencies should also be indicated for inspections, discovery of liens, and title research. The final step will be the negotiations with the lender until the closing.
