Short Sale Questions

I have a couple questions about short sales as a home owner considering the possibility of short selling 2 of my investment properties. (They are considered investment properties, but I never wanted them to be investments; life moved on and I just couldn't sell them...)

Here is the scenario:
Property 1) House: 1st mortgage, interest-only ~$189,950 (Aurora Loan Services); 2nd mortgage (installment-loan) ~$44,998 (Green Tree Servicing). Loans were obtained at time of purchase 80/20. I would probably try to sell it for between: $190,000 and $200,000.

Property 2) Condo: 1st mortgage, 5/1 ARM ~$172,500 (BofA); 2nd mortgage ~$17,000 (HELOC) (BofA). Loans were obtained at time of purchase 80-10-10. We could probably only get $150,000 for it.

Questions:
1) For the Condo, I am currently in the process of refinancing the first mortgage with BofA; if I am contemplating a short sale, should I hold off on the refinance? Would a recent refinance complicate things further?

2) Both properties are rented out...do we have to kick out the renters?

3) Do we stay current on the loans until they are sold? Does that help anything? Or does that hurt?

Appreciate your help.

Cody

Cody, you should do a search for a local short sale superstar and set an appt with them. Go to the find an agent button and do some research to find the best agent for you.
The burning question is: Do you have a verifiable hardship? In other words, why would the banks allow a short sale?
answers to your questions:
1. I would not refi if you have the short sale as a possibility, it will most likely make it impossible to refi and do a short sale right after
2.Renters can stay up until the day of closing unless they arrange something with the new owner
3.Some lenders require you to be in default, some don't. really depends on the investor. Missing payments can have a very negative affect on your credit...

Replies

Beverly Meade January 23, 2012 at 6:24am

I have found that it's nearly impossible to get investment properties successfully short saled.

It has been my experience that if the seller is not behind on payments, they won't look at a short sale.

The bank's definition of "hardship" and yours and mine are two different things.

Beverly Meade

Meade & Co. Real Estate

Aurora, CO 303-364-5892
- Jeff Payne > Beverly Meade January 23, 2012 at 6:34am
  
  Beverly, we short sale investment properties all of the time in Florida. More of our short sales are investments and MANY, MANY are current on their payments. There are a few investors who won't approve a short sale with a seler who is current but most will. Seller should expect some sort of cash contribution but I have closed many that did not require a cash contribution from seller.
  
  Impossible? Nope, far from it :)
  
  A hardship is a hardship.
Smitty October 31, 2010 at 10:18am

I agree with everything Jeff said.

I think the only thing I would add is from personal experience, it's harder to get a deficiency waived on an investment property, and if it is waived, you will likely have tax ramifications.

I still would pursue it. Both the above options are better than a foreclosure.

Good luck.
Jeff Payne October 29, 2010 at 9:26am

Cody, you should do a search for a local short sale superstar and set an appt with them. Go to the find an agent button and do some research to find the best agent for you.
The burning question is: Do you have a verifiable hardship? In other words, why would the banks allow a short sale?
answers to your questions:
1. I would not refi if you have the short sale as a possibility, it will most likely make it impossible to refi and do a short sale right after
2.Renters can stay up until the day of closing unless they arrange something with the new owner
3.Some lenders require you to be in default, some don't. really depends on the investor. Missing payments can have a very negative affect on your credit...

This reply was deleted.