The Benefits of Short Selling
Short sales are good for real estate investors as they allow them to pay less for the property during the pre-foreclosure phase. While the homeowner may owe $ 250,000 on the mortgage, you can buy the property for less, perhaps between $ 180,000 and $ 200,000. This new loan allows the homeowner and the bank to avoid the foreclosure process while recovering most of the value of the loan.
With record foreclosures, banks are motivated to make short sales. This creates many buying opportunities for a knowledgeable real estate investor. These opportunities may not be advertised, so you may have to work to find offers.
The best time to buy a property for short sale is during the pre-foreclosure period. At this point, the bank knows that the property risks losing out on its books. They are motivated to make the agreement work. Once the major foreclosure expenses have been paid, the bank will need to get more money for the property to recover its losses and expenses.
Look for homeowners who are currently in default and who are motivated to sell to avoid foreclosure. You can buy a list of these owners or you can find them at the county courthouse. Court records will list the owners to whom a notice of default has been served. This information is in the public domain, but requires some work to find and compile the list. The foreclosure list services send experienced people to the courthouse daily to keep their lists up to date.
Once you have a list of potential properties for short sale, contact the owners to find out if they might be interested in a short sale. Some will not be interested, but others will be very motivated. Do your homework at this point to make sure you have properly assessed the value and condition of the property before approaching the bank with an offer.
It is easy to find short selling prospects if you use a lock list. The foreclosure lists do the preparatory work for you at the courthouse and provide a list of owners who may be open to a short sale. You can make a short sale offer at any time before the actual foreclosure sale. You will need to act quickly if a property is approaching the foreclosure sale, but the potential profits are worth it.