What You Need to Know about St. Louis Short Sales
A St. Louis short sale is when a lender will allow a St. Louis homeowner to sell their property for less than what they owe in order to avoid foreclosure. When the housing market collapsed a few years ago this was one of the most popular real estate investment niches because many homes were being sold for as little as 60 cents on the dollar. Since the housing market has started to recover the popularity of the niche has been slowly declining but it’s still a good way to get your feet wet in the real estate business and add to your portfolio. Are St. Louis short sales the right area for you to get involved in the real estate game? Here are a few tips to get you started in your research to find out if St. Louis short sales are for you.
Negotiations are easy, but they take time
Many lenders will tell you to avoid St. Louis short sales because lenders are so difficult to deal with in other avenues of real estate, but in this case they aren’t always difficult. In fact, you actually can persuade them to see things your way a little easier with short sales. They would rather approve a short sale than go through the paperwork and money loss that comes from the foreclosure process. If you’re able to provide them with documentation of the repair costs, comparable sales, and other negative items there is a good chance they will see the valuations your way.
You should, however, keep in mind that short sale popularity dropped in part due to the length of time it took to complete the transactions. At times these transactions would take 90 days or more to close, with many deals sitting idle for weeks on end. This meant that investors would have money tied up in these deals for weeks without being able to look at other deals, with some facing issues at the last hour that would cause them to fall through completely.
You can help others, but nothing is certain
For many St. Louis homeowners they turn to short sales because it is one of their last options to avoid going into a foreclosure, which will stay on their credit report for several years. This can impact their ability to buy a car, rent a home or apply for a credit card. While a short sale will still impact their credit it won’t stay on their report for nearly as long. In purchasing a short sale property you’ll not only be increasing your potential for a profit you’ll be able to help out another St. Louis homeowner.
In order for a short sale to go through you need to make sure that everyone involved is on the same page. You need to convince the seller that a short sale is the best possible options for their property, and you need to convince the lender that they should agree to the offer. The lender will of course do their own valuation but you need to provide them with all the documentation to help prove the validity of your offer.
The paperwork isn’t easy
The paperwork will not be a walk in the park and will require work on your part, as there is plenty of required documentation. Also, since the lender will underwrite the application in the reverse process, they will require the documentation that shows that the homeowners cannot pay their mortgage. They will need to provide W2’s, bank statements, current paystubs and any documents that prove they have had hardships that prevent them from paying their mortgage.
You will need to provide all documentation that shows repair costs, property damage, and comparable listings to support your valuation. Keep in mind that a lot of documents will need to be provided to the lender before the lender will do anything. If anything is out of place the process will not begin. If they have to ask for any additional documents your offer will go back to the bottom of the pile and add several weeks to the process.
In the end only you can determine if St. Louis short sales are the way to go in your real estate investment career or not. You should do as much research as you can to learn about the different options for you in the real estate investment business before you make decision on which direction to take. With enough research you’ll be well equipped to make successful choices in your career.