How to do Short Sales Compared to Buying Bank Notes – The Differences
How to do Short Sales, Not so Easy!
Here is an article is about Short Sales and the difficulties that you have experienced when trying to close them.
A comparison of the two…
How to do Short Sales, The Requirements
Short Sales are transactions that involve a willing borrower you’ve spent time convincing that they would be a likely candidate for a short sale.
The loss mitigation officer in charge of the short sale proposals is probably overwhelmed with work. Because of this, they may take a longer time to get back to you.
Short sales compared to buying bank notes require more documentation. This includes financial statements, tax filings, bank statements, pay stubs, hardship letters, HUD-1s, and money.
In some cases if you can arrange for a simultaneous close on your short sale. If you cannot, you might be required to finance the purchase transaction.
How to do Short Sales vs Buying Bank Notes
Purchasing real estate notes involves 1 other person that are works with about 5-30 investors. They are the secondary asset manager or a loss mitigation officer. They take care of the documentation, you only need to review it. You only need to worry about the purchase and sale agreement and the assignment of mortgage, this process is very similar with all lenders.
With defaulted mortgages, money will be needed when buying the bank notes. But, there are many options in pursuing notes that require little capital.
California – Short Sales and Buying Notes
First of all, Civil Code 1695 won’t apply to you (when taking title in a deed in lieu negotiation, you are exempt from the constraints that equity purchasers have). As opposed to having to find a buyer and selling the property, there are multiple exits for you. They include loan mods, deed in lieu, refinances, and selling the note.
If you are buying bank notes with a singular interest, there are no licensing requirements.
You’re not subject to potential litigation as you are in lease option deals (e.g. your lease option is interpreted as a loan and you’re accused of equity stripping) – in a real estate note purchases, you can simply modify your loan. You are, however, subject to changing foreclosure laws, since you’re now the lender.
My Last Thought on Short Sales and Buying Bank Notes
So think about this. As short sales may be difficult due to a uncooperative lender that won’t negotiate with you. When buying bank notes, you might find yourself on the other side of the table having investors asking you to negotiate them and discount your defaulted mortgage so the property can be sold.
That would be a good change of pace right?