Foreclosure and Short Sales News

Short Sale investors scour court records, knock on doors and get tips from others to find people who have just entered the foreclosure process and are eager to prevent foreclosure on their home.

A typical Short Sale starts with convincing a distressed homeowner to sign a document that prohibits the owner from selling the property to another buyer.

Either the investors or their real estate agents persuade home owners to short sale their property for less than the lender is owed as an alternative to foreclosure. The investors get the home owners to sign an exclusive Option To Purchase Contract that gives investors up to a year to find a buyer.

When the lender sends someone to estimate the property value, the investor or their representative tries to persuade the home owners to claim a value that justifies a low-ball offer. This tactic will help reduce the purchase price. The investors also provide evidence to support the higher estimate to another buyer willing to purchase the property. This helps raise the selling price. The difference between the two will be profit for the investor.

Once the original lender agrees to the lower price and another buyer offers to pay more, the flip occurs. During the negotiation process, the homeowner and the lender are not told a buyer is willing to pay more.

The two transactions usually happen on the same day. They often are done at the same time, a procedure known as a Simultaneous Closing. During simultaneous closings, all parties involved are informed of the purchase and selling prices.

This is of no consequence to the homeowner since they typically get nothing out of the short sale transaction other than the freedom to move into another home.

Source: Fort Mill Times