Short Sale Training - How to Avoid the Deadly Short Sale Traps

Short Sale Training - Learn How to Avoid the Short Sale Traps. Read on and help yourself navigate those landmines and take advantage of the short sale tips that will aid you in your pursuit to success.

Armed with your reference materials checked through about 10 times, you feel excited, eager, and ready to take on your first short sale deal. You have even located what appears to be your first ever short sale lead using an old technique but it seems to have worked. Up to now, you've spent a quite 40% of the future profits you had in mind. It looked so easy and simple on what you saw in an infomercial late one night. The check you have sent for the materials was a bit awful in the pocket but you believe you will be able to recover back from your mishaps. Well, there may be a few traps hiding through the path that leads to a golden reward you've been wanting.

Shortsale vs Foreclosure

The primary key to a successful short sale venture is to determine if there had been an NOD (Notice of Default) issued against the property owner. Take note that if the lender has not issued a notice, usually they will not consider your short sale offer. The borrower is not behind yet and for all the lenders know, the borrower is ready, willing, and able to continue making payments. The first step in foreclosure process is for the lender to issue a notice of default against the owner of the property. Also find out if the owner can show need. You need to know if he/she is just tired of paying the mortgage or some disaster interrupt the borrower's ability to continue the payments.  No demonstrated need then no short sale.

Before a lender will consider your short sale investing proposal, he/she will seek a second opinion regarding the value of the property in today's market. If a BPO Broker's Price Opinion) hasn't been set up by the lender and if you can't determine the value of that BPO, you may be in a big disadvantage when you try to render a short sale package as lenders will not consider offers lower than 80% of the broker's price opinion. You also have to take note of the lender's approval before you can start to market the property. If you prefer not to get the approval then one way is to submit an incomplete package. You need to ask the lender for a short sale package and make sure all the required items are included.

Remember also that one of the reasons why a newbie go wrong in this business is because he/she fails to consider and take into account for home repairs and the yard.  So you acquired the property and find out that because you did not cover the repairs aspect, you got your hands on a money pitfall. Another thing you should be aware of, although it is not really your concern as an investor buying the property, is the tax consequences. You may mention it to the seller and there could be considerable tax consequences to the borrower. These are just few of the traps that an investor in short sale properties will encounter, none are really insurmountable but any of these traps are deadly if not properly attended in time. Be careful not to fall short and avoid the short sale traps.