More and more 'Short-Sales' are coming on the market in Las Vegas and Clark County.  This is a 'pre-foreclosure' process and I've written about it on here before.  In a nutshell here are some tips when considering a short sale.

• Most Homes LIST PRICE has NOT actually been negotiated with the Seller's Bank.
• Without a Pre-Negotiated Settlement, it could take up to EIGHT WEEKS or longer for the bank to ACCEPT the buyer's OFFER.
• When making an OFFER  on a SHORT SALE your REALTOR® should ask the Listing agent if the LIST PRICE has already been NEGOTIATED with the Seller's bank.
• The bank requires a pre-approval letter with contracts submitted on a SHORT SALE.  Before you even start looking make sure you've spoken to a lender and have the loan process started.
• There may be SEVERAL Buyers waiting to see if their offer was "THE ONE" accepted.
• Do NOT roll over if the lender does not at first meet your offer.  It is a test and the person who compromises his or her position first loses the game!  They need to move these properties on into the after life.  Banks are not in the business to own properties.
• You need to cultivate the ability make the bank perceive that their own FULL MARKET VALUE is not accurate and you need to communicate to the lender that you do not agree with their FMV based on the condition of the property, location, market etc.
• Most importantly, you need a REALTOR® who is properly trained on how to structure these deals as they will drive the majority of the real estate transactions in the near future.

At last count there were over 10,000 short sales and/or foreclosures available in Clark County, NV

...for additional information on Foreclosures and Short Sales see the articles posted in January 2007 on this blog.

A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a short sale. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.

At the time of this writing, foreclosures are at an all time high, which basically translates into more opportunities for you. Since foreclosures are increasing, this is the perfect time to jump into this because there will be more and more lenders discounting properties. It is safe to say that most lenders will accept a short sale, however, you may come across one or two lenders who will not discount. If the numbers work out for the lender they will do it.

It is best to do a short sale when the property is in the pre-foreclosure state. Yes, you can perform a short sale when the bank owns the property, however your profits will more than likely be smaller. There are two stages within pre-foreclosure. The first stage being those individuals who are behind on payments and the second stage are those who are behind on payments with a notice of default. In order for this to work properly and for you to successfully get a short sale, you must find the homeowners who are in the second stage of pre-foreclosure or more than 3 payments behind on their mortgage. Once the notice of default has been recorded, banks become motivated as well, so you are more likely to get a discount. Until that time, very rarely will a bank ever discount a mortgage that soon. Why would they? The homeowners still have time to cure the loan and make up the back payments.

It does not matter what type of house or condition it's in, all mortgages can be discounted. The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are "don't wanters". Properties that are over leveraged are also prime candidates. Most rookie investors who see a house over leveraged with an upside-down mortgage may think there is no hope for this property. On the other hand, this is a sweet deal to the savvy investor. Properties with large 2nd mortgages are also treated as gold because the 2nd mortgage is wiped out at the foreclosure auction. Lenders with a 2nd and 3rd mortgage position would rather have something than nothing.

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