A foreclosure short sale is an alternative to foreclosure. In most instances, it the borrower who suggests one. If an agreement is reached, the home is place for sale immediately. This is done through either the lender or a professional real estate agent. As for how you can profit from the buying and reselling of foreclosure short sales, you do so with reduced rates. Short sales involve selling a property for an amount shorter or less than the outstanding mortgage.
If you have the ability to secure financing or the needed financial resources on hand, don’t let the poor economy and real estate market get you down. In fact, do the exact opposite. Profit from it. You can do so with foreclosure short sales.
Why does a borrower suggest a foreclosure short sale? It is the easiest way. Yes, some borrowers and homeowners just avoid all signs of trouble. It seems as if they are hoping the problem will just go away, but it won’t. In addition to eviction, these individuals suffer financial consequences for years. Their credit score suffers and bankruptcy is likely. Those who suggest a short sale are responsible homeowners who have just fallen on hard times. They are concerned with their long-term financial future and want to avoid the costly and damaging consequences of foreclosure.
Why does a mortgage lender agree to a short sale? There are a number of reasons why. For starters, foreclosure is avoided. Lenders want to avoid foreclosure just as much as borrowers do. Foreclosure proceedings are long and costly. Lenders are also able to get their money quicker. With foreclosures, there is often a lapse between eviction, sale, and new occupants. This isn’t the case with short sales. The current borrowers stay in the home, paying what they can, until the sale is finalized.
When it is, they leave the property and the new owners move in immediately. Although not all of it, lenders get more of their money and quicker. They also have the option to seek the difference from delinquent borrowers.
How do you find foreclosure short sales? As previously stated, they are typically listed for sale directly through the lender or a real estate agent. Your best chance of success is dealing with a mortgage lender. Real estate agents profit from the sale of a home; therefore, they are likely to charge more. On the other hand, mortgage lenders want their money quickly and with as little hassle as possible.
You have better bargaining power with mortgage lenders. In most cases, they want to unload property even if it means taking a loss.
How do you make sure you are getting a good deal? If purchasing a home to reside in, your goal is to purchase a home you can afford. If looking to rent out a multi-family home or resell a single-family home for a profit, you need to make a profit. To do so, you must purchase the property for a low price. Foreclosure short sales do result in good prices, but never assume you are getting one. Homes depreciate in value. A home that was once valued at $200,000 may only be worth $100,000 now.
If the outstanding mortgage is for $100,000, pay less. In fact, make your offer much less. Comparing a property’s appraised value with the short sale price prevents you from falling into a financial trap.
In short, short sales are an ideal way for mortgage lenders and mortgage borrowers to avoid foreclosure. Not only that, you get an amazing deal on a property. Not just one person benefits from foreclosure short sales. Instead, everyone involved does.