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Did you know that properties listed as a short sale are over 30% of the Cape Coral, Fort Myers, and Lehigh Acres MLS area? A short sale is a pre-foreclosure and the trend in real estate investment today. In a short sale, your offer is negotiated with mortgage holder to accept *less* than what the seller owes on the mortgage. Why would a bank accept less than the mortgage and accept a short sale offer? Because the home owner is about to foreclose and the bank will have to take the property. Banks not only want to avoid defaulting loans on the books but statistics show that a forclosure will "net" the lender 27% less for the property. The loss is due to legal fees and loss in value due to abandonment.

How to purchase short sale property?
1. Locate a property listed in the MLS
2. Have your Realtor suggest an acceptable offer
3. Write an "As Is" offer for the homeowner to sign.
4. Proof of Funds or a Pre-Approval not more than 30 days old must included with your offer.
5. If your offer is accepted, be prepared to wait a few months.

The bank will require the following from the seller for a short sale offer:
1. A CMA and explanation of offer price.
2. An AS IS sales contract
3. A net sheet showing the bank exactly how much they will net after closing costs, taxes, etc. are paid.
4. A financial statement, bank statements, tax returns, W-2's, pay stubs
5. A hardship letter from the homeowner.
6. Estimated list and cost of repairs, using retail repair prices that the normal homeowner would pay for these items.
7. The bank will require that your hire a Realtor. Banks pay our fee directly.

Should you hire a Realtor?
1. A Realtor has all the forms and is trained to negotiate with the banks.
2. A real estate agent will prepare contracts, net sheets, CMA's, help negotiate with home owners and banks.
3. A real estate agent can estimate the resale price of the property and save you from a bad investment.
4. A real estate agent can resell the property for a profit so you can make the most from the investment.

This coming year in Cape Coral, there will be more pre-foreclosure shorts than any other property on the market. Buyers are attracted to short sales because they THINK they’re getting a good deal. A potential buyer finds home online or by making sign calls listed for a price that is TOO LOW for a home in that neighborhood. They are really excited and want to jump all over it. They’re getting a DEAL! But before jumping, ask yourself, if this is too good to be true, maybe it’s not for real after all. You may be about to make an offer a pre-foreclosure, short sale home. At best short sales are unpredictable. They are never short.

You’ll spare yourself a lot of grief by educating yourself about short sales.

What’s wrong with Short Sales?
A short sale SHOULD mean the seller's lender will accept less than the mortgage payoff and release the existing mortgage. Properties listed as a short sale does not mean the lender will accept your offer, even if you offer the listing price and if the seller signs the sales agreement.

What to do?
Get representation! I can’t stress this enough! Hire an EXPERIENCED REALTOR to work for you. Your Realtor can research the property. Find out who is on title, if a LIS PENDEN has been filed and how much is owed on the property. They will also know the tract record of the listing agent. Will a professional negociatr be used?

A buyer should considerer the following when deciding to pursue the deal. Is the SELLER actually qualified to short sell the home? Has the listing agent submitted the entire short sale package? Is the seller available and cooperating? This is crucial to the deal. If the seller can afford to make payment, the lender won’t let him off the hook. The seller may end up having a judgment against him for the difference between the selling price and the mortgage amount.

Have your REALTOR create a CMA to determine the actual value of the property. Don’t be surprised if the value is higher than the listing price. Expect the bank to counter at a hire price.

Even if you complete all the steps, be prepared to wait up to 4 months to close.