1st Step of Short Sale

Have an understanding with the homeowner

There are certain things the homeowner and the real estate investor doing the short sale need to understand upfront. One of the critical part of the 1st step of short sale is to know the homeowner's expectations. Most homeowners are happy to just walk away from the mortgage that is higher than their house is worth. But, there are some homeowners who expect more. Somehow, they still think they can make some profit off of their house. Therefore, it is best to clarify upfront what the homeowner can expect to happen in a real estate short sale.

Will the homeowner have to pay for anything?

Usually in a mortgage short sale, the homeowner will not have to pay for any fees. The real estate investor usually takes care of all the expenses. The real estate investor makes his or her profit off of doing a short sale with the bank. 

Homeowner's moving expenses

Some homeowners expect some moving expenses to be paid for them when they move out, even in a case of a short sale. Real estate investor and the homeowner need to have an understanding of who will be paying what and for what amount up front. The amount of moving expenses should be negotiated upfront.

Since you are not allowed to give the homeowner an start up money after the house has successfully gone through a short sale, most real estate investors have other ways out. Most real estate investors will pick out some household items at the homeowner's home and buy it from the homeowner. That way, the homeowner is not given money. Most banks do not want to know that the homeowner is accepting money.

How much moving expenses should I give the homeowner?

Usually a couple of thousands will suffice for the moving expenses for the homeowner. However, it is up to the real estate investor to give as much as he or she feels is a good amount. Some real estate investors help the homeowner find an alternative housing after he or she moved out and others help them move by hiring a truck for them. It really is up to the real estate investor and the homeowner how much will be acceptable in a short sale process.