It is important to know how to do a short sale for successful real estate investing.  There are numerous properties in default or foreclosure, therefore it is necessary to learn how to do a short sale.

 Follow these simple steps for a successful short sale. 

1)     Identify a good candidate for short sale

 Some properties are good short sale candidates, others are not. To be a good deal, I consider a property that becomes profitable after only 10-20% of the mortgage has been discounted as a good short sale candidate if it has only 1 mortgage. 

 If there is more than 1 mortgage, you can get a 70-80% discount on the second mortgage.  This creates enough equity for making profits.

Of course, the motivated seller must be behind on their mortgage to qualify for a short sale. 

2)    Sign a Sale / Purchase Agreement

Once you have identified the right property, you need to sign a contract to buy the house.   This is required by all lenders. 

Also important is an Authorization to Release Information form, which allows you talk to the lender.   No lender will discuss a third party mortgage unless they have an Authorization to release. 

 A statement of hardship is also required by all lenders.   A hand-written one increases credibility with the lender.

3)    Fax Authorization to Release Form

Call the lender and ask for the fax number to fax Authorization to Release Form.

 It usually takes 48 hours to register in their system.

4)    Fax required paperwork

 After Authorization to Release Form is accepted, request them for a short sale package.

Prepare the short sale package exactly as they request.  In most cases, you can find this information on the mortgage lender's website.

Fax all the paperwork as requested.  Missing or incorrect paperwork can delay the short sale process for months, so it is important to get it right the first time. 

 You will need to wait at least 48 hours as it registers in their system.

he short sale is then allocated to an underwriter who will see it through the end.

5)    Follow up

 This step can get tiresome.  Most underwriters have hundreds of short sales to deal with.  It is therefore important to follow up to make sure you can get an answer soon. 

6)    Attend BPO appraisal

If your offer looks good, the lender will then do an appraisal (BPO).   They will ask you to open the property for them.

 Be sure you are present for the BPO appraisal.

While you may not influence the outcome of the appraisal, pointing out important issues like roof or foundation repairs can significantly affect the appraisal value in your favor.

7)    Acceptance or denial

The lender will then accept or deny your short sale offer.   You may need to submit a counter offer if your offer is denied.

8)    Close the deal

Next is to close the deal and follow your exit strategy to make money!