Without a doubt the hottest topic in real estate investing are short sales, buying homes through transactions where lenders accept a sell for less then what they are owed, for homeowners facing a financial hardship, therefore avoiding the costly foreclosure process.

According to top industry leaders, short sale transactions drastically increased in the final quarter of 2007, expected to increase even more in 2008. Lenders have seemed to recognize that they are losing more money through the foreclosure process, then if they successfully negotiate a short sale.

Investors, Realtors and lenders should not assume that a short sale is a quick process, in most cases they take a considerable amount of time to put together. Short sales are negotiated, in most cases, with multiple lenders so there is nothing fast about them. Negotiating a short sale can take a considerable amount of time. In a short sale negotiation, everyone involved wants to be the "winner", so coming to terms with all parties involved can be an exhausting task.

Complications such as a second or third mortgage lien on the property will create a situation that will take time to workout; these lenders will have to agree to a short sale transaction too, not to mention the introduction of a home equity line against the property. The borrower may be four to six months in default on the first mortgage and the property may be worth then $100,000 or more of the original purchase price, however all lenders with liens against the property will have to agree on the terms of the short sale.

Most lenders in the second or third position will be willing to negotiate a short sale; in fact, it is there best interest, in a foreclosure these lien holders typically are wiped out. In the event of a short sale they may still in a position to get some of there investment back, it may only be 10-30 cents on the dollar, but better then nothing at all.

There is usually a lot that needs to work out in a short sale, excellent negotiation skills are required to get the best possible deal. Many unforeseen complications due show up once the negotiation process is started, you must be ready to deal with these as you are working with lenders on a short sale transaction.

There is an art to negotiate a short sale, but do not let this stop you, give it try. You may be the next lucky investor to pick up the "hottest deal in the market".

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