For real estate investors, purchasing short sale homes be able to be a enormous opportunity. The evident benefit of which is that they be able to buy an investment property for well below the market value, and in the case of a short sale, less than is due on the property. For those investors with the patience and fortitude to buy a short sale property, the payoff may be immense.
So how does one invest in or buy a short sale? Initially, to define a short sale in real estate, it is just buying a property for less than is owed. For an investor the clear benefit of this type of investment property is apparent. Please keep in mind however, that the upside for the bank is low so there are a number of requirements that need to be met in order to complete a short sale. Because of this, dealing with a lender when buying a short sale requires a fair amount of work and patience.
Before trying to buy a short sale, you must be aware of the roles that each participant will play in the process as well as their motivation. The nearly all understandable participant in the short sale process is the owner of the property who is willing to walk away from the property for less than is owed on the loan. Before even beginning the short sale process, be sure that the property owner is willing to complete the transaction and understands the implications.
If you have a willing property owner, get to also know the loss mitigation department of the mortgaging bank. As a financial institution, a bank will only agree to let an investment or mortgage go if the cost of owning it is going to be greater than the payoff. For the majority institutions, they will only agree to a short sale if the property is at risk of foreclosure. Because that is a guiding principle, you must create a circumstance where the institution sees the short sale as the best option.
Now that you understand the motivations of the two players, purchasing a short sale is simply a matter of satisfying their two unique needs. Develop a short sale request with the help of the property owner. Include a letter from them explaining their incapability to continue to pay on the mortgage as well all additional substantiation. Find and photograph and areas of the property that need repair, and get an appraiser to come out and give an appraisal based upon the lowest marketable value of the home.
Combine all of these documents together as well as any additional documents required by the loss mitigation officer of the bank to create your short sale package. Submit your purchase request along with the short sale package to the institution and gently push it through the approval process. It the request is approved, your purchase of the short sale goes through. If not, just modify your offer and submit it again.
So how does one invest in or buy a short sale? Initially, to define a short sale in real estate, it is just buying a property for less than is owed. For an investor the clear benefit of this type of investment property is apparent. Please keep in mind however, that the upside for the bank is low so there are a number of requirements that need to be met in order to complete a short sale. Because of this, dealing with a lender when buying a short sale requires a fair amount of work and patience.
Before trying to buy a short sale, you must be aware of the roles that each participant will play in the process as well as their motivation. The nearly all understandable participant in the short sale process is the owner of the property who is willing to walk away from the property for less than is owed on the loan. Before even beginning the short sale process, be sure that the property owner is willing to complete the transaction and understands the implications.
If you have a willing property owner, get to also know the loss mitigation department of the mortgaging bank. As a financial institution, a bank will only agree to let an investment or mortgage go if the cost of owning it is going to be greater than the payoff. For the majority institutions, they will only agree to a short sale if the property is at risk of foreclosure. Because that is a guiding principle, you must create a circumstance where the institution sees the short sale as the best option.
Now that you understand the motivations of the two players, purchasing a short sale is simply a matter of satisfying their two unique needs. Develop a short sale request with the help of the property owner. Include a letter from them explaining their incapability to continue to pay on the mortgage as well all additional substantiation. Find and photograph and areas of the property that need repair, and get an appraiser to come out and give an appraisal based upon the lowest marketable value of the home.
Combine all of these documents together as well as any additional documents required by the loss mitigation officer of the bank to create your short sale package. Submit your purchase request along with the short sale package to the institution and gently push it through the approval process. It the request is approved, your purchase of the short sale goes through. If not, just modify your offer and submit it again.
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