Real Estate Investing Secrets
What are short sales and why do many mortgage companies decide not to do them? A short sale is when the homeowner sells their property for less than what they owe. This seems to be only a good solution for the borrower, the real estate investor or person purchasing the home, but it can benefit the lender as well. That is exactly why it is to be considered one of the real estate investing secrets you must know.
This typically is an option that is considered when the homeowner is about to be foreclosed on or is thinking about filing bankruptcy. The sale allows the homeowner to salvage their credit, be released from the debt they cannot pay and keeps them from experiencing the humiliation associated with foreclosure or bankruptcy.
By selling the property at a lower price, the lender can save money as well. They do not have to deal with foreclosing on a property and trying to re-sell it, nor do they have to wait for an extended period of time if the homeowner files bankruptcy.
Even foreclosure can mean a property can be in limbo for up to a year. All of this costs the lender a great deal of money. The main thing most mortgage companies have against short sales is the loss of money right now. However, a year down the road, even more money can be lost.
Even when the real estate market is overwhelmed with an abundance of properties such as it has been recently, the lender is often the eternal optimist and they foresee the market turning around at any time. They do not want to lose the money they can make on the property.
For the buyer, a short sale can save them as much as 40% or more on a property. Depending on whether they are buying it as an investment or as their main residence, the profit or savings can be considerable. If they are purchasing the home to live in, the dream of home ownership is realized. For some, this is the only way they will be able to afford a home of their own and for others this is one of the real estate investing secrets to know.
For a Realtor a short sale can be a way of helping a homeowner who is having difficulties making their loan payment. In addition, they are helping a buyer get a home for below market cost. This allows them to make a commission on the sale of the home and often this is the only solution for continued real estate sales when the market is down. For the real estate agent, this can mean they have an income even when sales are down.
A short sale can benefit many people. Even though lenders may balk at the idea of selling a property for less than what is owed on it, the alternative of receiving nothing from the property owner who defaults on their loan means even more of a loss. Lenders are not real estate agents and the last thing they want to do is try and sell property.
The property that goes back to the lender may sit on the market for an extended period of time. When this happens, every month the property is in the possession of the lender, they lose money. Now there’s real estate investing secrets worth knowing.
To your success as you discover more real estate investing secrets! Learn the secrets and then put them to work for you.
