Short Sale Investor Contracts

I came across one of the best articles regarding Short Sales and Investors. It was written by John Michailidis and you can read it at

http://www.brokeragentsocial.com/article.php?article_id=332

John calls it a Pre-Foreclosure Investor Buyout (PFIB). It is one of the best ways to get your short sale purchased, negotiated and closed.

"A property owner facing foreclosure has likely exhausted all options prior to considering a short sale:

- Tried to sell the property conventionally – either through a real estate agent or “for sale by owner.”
- Tried to renegotiate the loan terms with their lenders (loan modification).
- Tried to refinance.

So there they sit, alternatives exhausted, waiting for what to them seems to be an inevitable foreclosure and all of the anguish, credit damage, and self-esteem issues that go along with it. They realize that they owe more than the property is worth, so they understand that no matter what happens they will not be recouping any equity on the property. They just want to be able to walk away, without a foreclosure on their record, and with as few financial repercussions as possible."

In essence for a PFIB to happen, the Investor writes a contract on the property. The Investor then, with his professional negotiators and BPO agents, immediately starts to negotiate a short sale price with the Owner's lender. At the same time, the Investor lists the property for eventual sale to an end buyer. Immediately starting the the negotiation process with the lender is huge because in a "normal" short sale process it make take months before an offer is made and then several months for the negotiation to complete. Most end buyers won't wait that long and drop out, thereby leaving the original Owner probably going to forclosure.

The Investor's interest is to stop the home from going to foreclosure and to make a fair and equitable profit after his expenses (real estate commissions, negotiator fees, etc.) are paid. If there is an end buyer who has a valid contract and there isn't enough for the Investor to cover his expenses and make a profit, the Investor will step aside and allow the end buyer to close on the home - again the original Owner prevents a forclosure.

As John states in his article, it is a win-win for all parties involved and the best part is that a foreclosure is prevented for the over-stressed homeowner.