Los Angeles Real Estate Investors say, two options for real estate investors are short sale and foreclosures.
These are homes in financial distress or those who fall behind on their mortgage.
In both scenarios, real estate investors lose the investment property.
Although, every option has a different process.
Los Angeles Real Estate Investors Different Sale Procedures
Los Angeles Real Estate Investors say, short sales get started by the real estate investor or homeowner, who’ve learned the value of the property dropped by 20% or more.
The process for a short sale is done by the lender, normally it’s a bank.
They would approve the sell of the house for less than the amount owed on the mortgage.
Defaulting On The Loan
Los Angeles Real Estate Investors say, foreclosures on the other hand, are initiated only by the lender.
In this case of mortgage payments, as a result of defaulting of the loan, the lender seizes the real estate property.
They then are forced to make a sale in an attempt to recollect on the initial investment.
Now, foreclosed investment properties can be auctioned off.
If doing a short sale it can be a lengthy process, and sometimes it can take up to a full year to close.
Controlling A Short Sale vs. Foreclosure
Los Angeles Real Estate Investors say, Short sales are a lot of paperwork and it’s an intensive process.
Once you’ve gotten the approval from the lender, real estate investors sell the investment property through a short sale to gather documentation.
It helps to prove current financial hardship.
They would have to prepare a financial package then submit it to a lender.
Short sale packages could include:
- Letter of authorization
- Listing agreement
- Preliminary closing statement
- Completed financial statement
- Hardship letter
- Two months’ worth of bank statements
- Comparative market analysis
- List of recent comparable sales
All these documentation have to get gathered, real estate investors or homeowners will be more in control.
This will allow them to play more of an active role.
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