Knowing how to do a short sale is a must 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.
Here is a step by step guideline of how to do a short sale.

1)     Identify a good candidate for short sale
Some properties are good short sale candidates, others are not.  If a property has only one mortgage, it is a good short sale candidate if it becomes profitable with only 10-20% discount on the mortgage.

A second mortgage can be discounted by as must as 70-80% or more. This creates enough equity for making profits.

A seller must be behind on their mortgage to qualify for a short sale.

2)    Sign a Sale / Purchase Agreement
Next you need to sign a contract to buy the house.  All lenders require to see this.

An Authorization to Release Information form must be signed so the lender can talk to you about the mortgage.  This paperwork must be present for any lender to talk to you.

A statement of hardship is also required by all lenders.  Preferably, have the motivated seller prepare a hand-written statement to increase credibility.

3)    Fax Authorization to Release Form
Call the lender and ask for the fax number to fax Authorization to Release Form.
Usually it takes 48 hours to register in their system.

4)    Fax required paperwork
Once the Authorization to Release Form has registered in their system, call them and ask what they need to do a short sale.

Prepare this paperwork exactly as they need it.   This information is mostly also available on the 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 is the most tiresome step of a short sale.  most underwriters are over-worked with hundreds of short sales. It is therefore important to follow up to make sure you can get an answer soon.

6)    Attend BPO appraisal
If your offer is acceptable, the lender orders 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.   If it is denied, you may then need to submit a counter-offer.

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

Simon Macharia is a real estate investor who has done numerous short sales. He runs his business from an interactive <a href=”http://www.realestateinvestorswebsites.net”>real  estate investor website</a>  from http://www.realestateinvestorswebsites.net .