|Short Sales in Real Estate Investing
This is Short Sales Are Vampires in Real Estate Investing. A short sale is a process by which a stock trader sells the stock and later buys it. It is back at a lower price. making the reverse profit if the stock’s price falls. In real estate, a short sale is where a lender takes a principal reduction on a mortgage to facilitate. A sale to a buyer. Short Sales Are Vampires in Real Estate Investing.
Sales in Real Estate Investing
For a lender to do this. The property will generally be overdue on the mortgage or in foreclosure. Actually, It’s not that it has to be in foreclosure. t’s that the lender won’t allow the sale unless the borrower is in arrears with their payments. This is usually a vengeful measure by the lender and by waiting longer to make the sale, the lender loses more money. The homeowner loses more of their credit score – no logic, just revenge!
Five years ago, lenders didn’t get many calls to short sell and when they did, they turned properties upside down into little pots of gold for investors. With the collapse of the lending industry as we used to know it, lenders are now asking foreclosure homeowners if they know anyone who will make this type of sale before starting foreclosure proceedings. The thought should be why wait for a further decline in the market while the homeowner hangs on – just go ahead and do a short sale and take the property off the books.
Real Estate Investing
They are handled by the lenders’ loss control department. This is a completely different department from the foreclosure side and a completely different mentality. In the past, the short sales associates had hundreds of files processing them all, and the REO staff had a manageable workload. This has changed dramatically with the Loss. it department is no longer in a rush to close deals; they just pass them on to the REO group!
These kinds of sales are time-consuming. spite what someone tells you. The bigger problem is getting paid for the deals as an investor. Obviously, you have to be in the trading cycle to get your winnings and up until a few months ago, there were a number of ways to get paid even if the lender didn’t like it. We used options, land trust transfers, and brokerage commissions on steroids. And an assortment of “costs or expenses” on the HUD-1 statement.
Just a week ago. But brokers can still get a commission, but they are generally limited to 5%.
Why do people sell these? For the homeowner, the short sale ends the foreclosure process and reduces the impact on his credit report, for the broker he will receive a 5% +/- commission, and for the investor who may have found the deal or the buyer or both – he would get a profit – maybe. That’s how it should work. What happens all too often these days is the short sale in real estate investing. Approval processing time takes longer than a buyer is willing to wait, or the buyer can’t get financing by the time the seller’s lender is ready to close the sale. to approve.
Recent federal guidelines on short sales real estate investing attempt to allow lenders to issue approvals. Or declinations in 10 days or less. Sounds like an ideal answer to the problem. But the reality is that the lenders just have to decline the sale and wait for a new offer. Frankly, ten days to review and approve a short sale real estate investing file is ridiculous unless. The lender doesn’t really care what price they receive for the property. But again, well-meaning government officials take actions that sound politically good but are essentially unenforceable.
I am sure there is a vocal minority of short-sale gurus, and brokers. And investors who regularly short sell who would object to what I have just written. But here’s the reality – you can make a short sale in real estate investing in two to three weeks. f you offer the lender 80% or more of the BPO (Brokers Price Opinion) or appraisal value he received for the property. r the entire outstanding loan balance.