I want to talk to you about short sales this time. I know I’ve talked about REOs and talked about wholesaling and a slew of things. Trust me – there is a long list – if you can go back and check out some of my videos.
Short sales – I was talking to some of my clients the other day and they were asking about what that meant and what specifics for that property. They were a buyer, so I’m working with some buyers and they were asking about short sales. Short sales – if you see that when you’re searching for a property, there’s a couple of things. As a buyer and a seller they mean two different things, but let’s talk about buying real quick.
What shorts sales mean as a buyer means that the bank has taken a loss on that property for that seller. Even though they are willing to sell that property, they’re still taking a loss for it. So if the property was worth $500,000 and you see it listed for $450,000 then that bank is taking a $50,000 hit on that property. So you’ve just got to be aware of that and that’s typically good for buyers and it’s not good for sellers and I’ll get into that in one second, but just make sure you’re cognoscente of that and make sure you’re looking at that when you’re looking at properties and make sure that your agent is good and he’s following up with the agent that has it listed. Make sure that it’s approved. Make sure it’s approved! Okay? You need to have an approved short sale to make sure it works well. Okay?
And then on sellers – make sure, if you’re going for — This is a long topic and I’m going to shorten it down real quick, but short sales — As a seller, you are taking a loss on that property. The bank needs to approve it for you to list it and just know — buyers and sellers, real quick — It’s going to take 3-6 months to get that sold. For the approval process, the banks are big, they’ve got a lot of things moving and a lot of things going on. So just make sure that you have a conversation with your agent about short sales, buyers and sellers.
Sellers – you’re taking a hit. So just realize it’s going to take a hit on your credit and it’s going to take a hit on the next time you try to purchase a property too, because there’s a seasoning period in there. So talk to you lenders as well.