In terms of the real estate short sale market, it is a buyers market. Those who have the needed financial resources are urged to act now. Whether you want to buy a cheap first home or buy and resell for a profit, now is the time to act. Speaking of acting, be sure to move short sale properties to the top of your list.
Short sales are when a mortgage lender agrees to sell a home for less than the outstanding mortgage due. For buyers, this means many opportunities to make or save money. For example, if a home is valued at $150,000 and the delinquent borrower still owes $75,000, you may be able to purchase the home for around $65,000. Not bad considering the home’s fair market value is $150,000! The poor real estate market makes it difficult for these properties to sell at fair market value, thus the acceptance of a short sale.
You now know that short sales are a good value for the money. It is a cheap way to buy a first home and an easy way to turn a profit with real estate flipping. So, what comes next?
Hire a real estate agent to represent you. This step is optional, but recommended for first time buyers. It is always a good idea to have an expert in your corner. When choosing a real estate agent, don’t opt for the first you see. Instead, perform a series of interviews. Your intent is to buy short sale properties, so use a real estate agent who is familiar with them.
Find short sale properties. If you use the services of a professional real estate agent, this step is very easy. Many states allow real estate agents to disclose the status of properties with each other. This means that your agent can call another and ask if they have any short sales available for sale. It really is as easy as that.
If you are not using a realtor, it is still easy to find short sales. They are sold either directly through the mortgage lender or through a real estate agent. Pickup the phone and call all financial lenders in your area. Ask if they have short sale properties available for sale. As for realtor sold homes, use the internet to view MLS websites. Most realtors drop hints about a property’s status. Look for telltale signs, such as “lender must approve,” or “this property is in pre foreclosure.”
Make an offer. Most short sale buyers are unable to see the property before making an offer. Use your best judgment. The good news is that you can submit multiple purchase offers if one is denied. So, aim low at first, as you have nothing to lose. If represented by a realtor, heed their advice. If they have experience dealing with short sales, they may know how low a lender is likely to go.
To profit from short sales, never pay more than the home’s last appraised value. In fact, pay less. How much less depends on you.
Wait. After submitting a purchase offer, you will start to play the waiting game. An offer can come as quick as a few days, but you could wait months. It all depends on the property. If a lender just agreed to a short sale, they may still be comparing foreclosures and short sales to see what yields the most money. If the property is deemed a hot seller, they may be waiting for other offers. If the home has two mortgages, both lenders must approve the purchase offer and this can take time.
If your offer is accepted, the next step depends on your finances. If you already secured financing ahead of time or have the needed financial resources on hand, the sale can close in as little as 30 days. During this time, the current home occupants are vacating the property. As soon as this is done and all paperwork is signed, you can either move in or state preparing the home for resale.