Beware the Short Sale

Short sales are very popular with real estate investors these days.  A short sale is the sale of property by a distressed owner with the blessing of the lender. Often this sale will be done when a borrower is in serious default and the property is about to be foreclosed.

Beginning April 5 the federal government will provide financial incentives to lenders to do more short sales. This doesn’t mean they will. But if the lender participates, they will procure a BPO (broker’s price opinion) before a property is listed and they will notify a seller of the price the lender is willing to accept in a short sale. If the seller brings a buyer at that price (or higher) the lender is obligated to accept that price within 10 days.

The response by lenders to this non-mandatory program has been lukewarm at best.

On thing that always amazes me about investors who purchase distressed property is their failure to conduct due diligence. If you are going to purchase property ALWAYS order a title search. There are certain liens that will not be extinguished (even through foreclosure) like tax liens and mowing liens. Spend a little money up front and save yourself lots of headaches and money down the road.

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