Starks Marketing LLC.,                           

The Blog

Foreclosure Articles – Starks Marketing LLC

Have you heard that short sales are the alternative to foreclosure? They are and they are increasing in popularity. More borrowers and lenders are agreeing to them. For borrowers, short sales lessen the credit blow. For mortgage lenders, short sales allow the avoidance of costly and lengthy foreclosure proceedings.

So, if you are looking for a great deal on a home or another property, don’t discount short sales.

short

As nice as it is to hear that short sale properties often result in good deals, you may be curious as to what they are. Short sales are when the mortgage lender accept the fact their borrowers cannot pay. The property will soon enter into foreclosure. Unfortunately, foreclosure proceedings are long and costly. Plus, otherwise cooperative borrowers put up a fight when it comes time to vacate the property. In fact, some must be removed by force. This is more than many lenders want to handle. Instead, they opt for a short sale. This is when the home is sold for less than the outstanding mortgage due.

On average, short sale properties are a good buy. For example, if a home is valued at $125,000, the borrower owes $70,000 on the mortgage, and you are able to pay only $60,000 you make out well. Essentially, you get a steal. Yes, you do have to put up a large amount of money upfront, but think long-term. Whether you want to flip the property right away or live in it a few years before reselling, you automatically make a profit. After all, you paid $65,000 less than the home was worth! Even if you cover the cost of the mortgage, money is still made.

In most cases, short sale properties are a good buy. You get a good value for the money. However, there are cases in which buyers lose money. So, how do you prevent that from happening?

Know if a property is a short sale property. Lenders either opt to sell the homes themselves or use a third-party realtor. In either instance, they want their money. They may try to sell the home for more than the outstanding amount due. In some states, it is legal to not disclose the true status of a property. Essentially, it may be a short sale property, but you may not know.

So, how do you know if a for sale property is actually a short sale? Properties that are sold directly through the lender are almost always short sale properties. It is that or else the lender repossessed the home at a foreclosure auction. Either way, you can and should get a good deal. As for real estate agents, they may not outright state the status of the property, but most drop hits. Review the listing for phrases such as “lender must approve,” or “in pre foreclosure.”

Know the property’s appraised value. This should be public records. If the appraised value is years old, hire your own appraiser or inspector. A quick examination will let you know if you are getting a good value for your money. A true short sale property should be less than the home’s fair market value. In dire situations, where the lender wants to avoid foreclosure at all costs, they don’t even consider the fair market value. They just want to recoup as much of their money as possible.

Know if a home is underwater. A problem facing many homeowners today is that they owe more than their home is worth. This is common with second mortgages or homes that were purchased during the real estate boom. If a home is underwater, proceed with caution. Remember, not all lenders take a home’s value into consideration. They just want their money. This typically works out to your advantage, but not with underwater homes. For example, a home may be valued at $250,000, but the borrower owes $300,000. Even if you pay the $250,000 you don’t get a good value for your money. Yes, you are purchasing a home at fair market value, but your goal is to get a good deal. Unless buying a first home that “you must have,” walk away.

In conclusion, most buyers get good deals with short sale properties, but there are no guarantees. For that reason, do the research first. Don’t spend more than required, especially if your goal is to profit from the buying and reselling of short sales.

Real Estate Investing - Everything You Need To Know (FREE DOWNLOAD)

Leave a Reply

HTML Snippets Powered By : XYZScripts.com
%d bloggers like this:
x Shield Logo
This Site Is Protected By
The Shield →