In today's market, those investors who be able to successfully buy short sale properties stand to make a lot of capital. Investors familiar with short sales know the benefit of being able to buy a property at fire sale prices. If you are new to purchasing short sales of preforeclosures, please understand that while the process may seem complex, the return on investment may be fantastic.
What steps are needed to buy a short sale? To get started, you must appreciate that a short sell is just buying a property for less than the mortgage value. For an investor the apparent benefit of this type of investment property is clear. Please keep in mind however, that the upside for the institution is low so there are a number of requirements that need to be met in order to complete a short sale. Because of this, a enormous deal of patience is needed through the buying process
The most apparent player in the transaction is the property owner, even though your interaction with them will actually be limited. There are a number of motivations for a property owner to be in this position, but before performing any due diligence in buying a short sale, you must be sure that the owner of your target property is motivated.
Be sure that you get the property owners approval, but you will need to contact the loss mitigation department of the bank in order to start the process. As a financial institution, a institution 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. Given this fact, if you plan to buy a short sale, you must demonstrate to the institution that letting the short sale proceed will be less costly than not proceeding.
Now that you understand these two players, the process of convincing each to short sale the investment property to you is a process of working with both parties to create a offer that will satisfy the needs of both the property owner and the lender. Develop a short sale offer with the help of the property owner. Include a letter from them explaining their incapacity to continue to pay on the mortgage as well all additional substantiation. Locate any and all areas of disrepair on the property and take pictures of them, 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 lender to create your short sale package. Present your purchase offer along with the short sale package to the bank and gently push it through the approval process. It the proposition is approved, your purchase of the short sale goes through. If not, simply modify your proposition and submit it again.
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For real estate investors, purchasing short sale properties may be a huge opportunity.
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