|
In the last few years, homeowners who purchased their dream homes, put in yards and made improvements, maybe remodeled, raised their children, and overall contributed to the neighborhood and city, have lost their jobs and are facing foreclosure and the loss of their home. Many just get up and leave the home, abandoning it. You can see many vacant homes with brown lawns in every neighborhood today all across the country. However, widespread foreclosures create numerous problems for neighborhoods and communities in general.
The Down-Side of Foreclosures:
Vacant houses will draw transients and cause crime to increase and it will cause home values to plummet and cause neighborhoods to deteriorate fast. Lenders and mortgage finance companies want to get any homes that go to foreclosure sold fast and off their books for these previously mentioned reasons, but they also want the income from placing new loans against the homes, so they are anxious to get distressed homes sold fast and in the simplest way, and most are ready to wheel and deal with you or your real estate professional.
The Up-Side of Foreclosures:
There are many good deals that can be made by working with lenders, and with the distressed homeowners to get them to sell you their distressed property, and for their sake they need to do it fast. The prices of the Short Sale homes will be determined ultimately by the lenders, not the homeowner. The homeowner may put a price on the home, but usually wont put an amount over that which is owned to the lender for the mortgage loans. The homeowner just wants out and fast. The homeowner works with a real estate agent to determine the actual value of the property, and can make a recommendation as to an offer price to submit to the lender. The lender is going to sell the property to whomever offers the most money for it. Remember, most lenders sell the homes just for what is owned on the mortgage loans. The homeowner and lender will usually not mark up the sales price because they both are in a hurry to get rid of the property, and for the lender to get it off their books.
Short Sale Homeowner Responsibilities:
When the homeowner owes more on the mortgages than what the value of the home is. He finds a buyer who makes an offer to the lender to pay off the mortgages as the price for the home. This process takes much time. There is a lot of paperwork to be submitted by the homeowner to qualify for a Short Sale. The homeowner must put in writing why he is having financial problems. The homeowner must partner up with a good real estate agent, broker or Realtor because the lender will need a market analysis done, an appraisal, possibly a home inspection, etc. The real estate professional also has to negotiate with the lender on details for Short Sale approval, and again when they get a buyer. Note: When a debt is forgiven by a lender, the IRS considers the amount forgiven as taxable income! You will have to pay taxes on that forgiven amount.
Invest In Real Estate Using The Short Sale:
There has always been many astute and experienced real estate investors who look for good deals on homes by contacting distressed property owners, or have real estate agents watching for prime deals that come to their attention. Many lenders have lists of people who are interested in buying homes that are about to go into foreclosure. It's to the lenders advantage to have distressed homes sold rather than go into foreclosure. Investors who concentrate on finding and buying the Short Sale homes can find good houses, in good neighborhoods of their choice, make offers to buy and either move into the home, rent it out or put it on the market when needed repairs are completed. What a great way to pick up a home, and usually at a good price. Many investors are known to pick up homes with as much as 50% equity by the time the deal closes. Best thing to do if you have an interest in buying Short Sale homes, is put the word out on what you are looking for, the areas, or communities you like, the size, price etc. Visit banks and other lenders and let them know that you are interested in buying Short Sale homes. You also can talk to real estate agents, brokers and Realtors, escrow companies, title representatives, and anyone who works in the real estate or mortgage business. You can put up flyers, take out ads in local newspapers and in company bulletins. Put ads on various websites. Somehow you have to get the attention of the financially stressed homeowner. The offer you make will be made to the homeowner, or his representative, and then submitted to the lender for approval. You must also have your finances in order. You are going to have to show that you have the money to buy the home, make any payments, cover insurance and taxes, and be able to convince the homeowner and lender that you have the means to take care of any problems areas, and any repairs that may be needed. There will be some up front costs like paying for an appraisal, a home inspection and anything else that the lender might want. There still is no guarantee that the lender will accept your offer, so you might be out some or all of these up front costs.
|
