The good news is these can be accomplished with in 60 days and the pre-foreclosure sale can be pre-approved (Approval to Participate). In most cases the seller will recieve between $750 to $1,000 net proceeds from the sale provided they are current on taxes and HOA dues and have no other liens. In general, the PFS(Pre Foreclosure Sale) is for owner occupants or individuals forced to rent their homes because they could not maintain the payments. NO WALKAWAYS. The other good news is that under PFS guidelines, the seller is always given a full release of liability
Short selling homes with an FHA or HUD mortgage are unique animals. The downfalls are that the home price is based on an appraisal which must be performed using only comparables of non-distressed properties. This is very hard to do in the West Valley area as almost 70% of homes for sale are distressed (either short sales or foreclosures). Much of the remaining inventory are flips which are homes bought at auction, rehabbed to pristine condition and then resold at top dollar. This form of appraisal sometime results in the bank establishing an unrealistic or un-achievable price for the short sale.
Another limiting factor on a PFS is the buyer can recieve a maximum of 1% for buyer closing costs and a maximum of $1500 towards subordinate liens (2nd mortgages and past HOA dues if they are a lien). The seller can use their incentive to make up excesses in these costs so there is no out of pocket expenditure to do a PFS short sale.
