The short sale, for investors
Short sales today are on the rise and there are more coming. This creates an opportunity for investors to help a homeowner out of their situation and make some money. But, you need to be careful who you hire to work for you.
The first clue that someone is not familiar with short sales or just not being truthful is the statement “cash buyers we close in 5-7 days”. The banks have so many files there is no way to negotiate and settle in that amount of time. It takes 3-5 months, regardless of where the money is coming from. The banks need time to evaluate the situation and make the decision. This is why many experienced agents believe that a short sale purchase is not appropriate for a first time home buyer. To buy a home that is a short sale takes patience.
There are characteristics to a good short sale purchase. Many investors feel they should take every short sale that comes along. That is not true. The investor should only take the good deals that makes them money.
There are five characteristics that make a good investment deal. Any one of these should get your investor mind thinking. 1) Large 2nd mortgage, 2) an absentee owner (out of state), 3) title issues, liens, judgements, etc… 4) Million Dollar homes. These factors make for an investment that is more probable of large profit.
There are also some things to avoid. 1) no 1 or 2 bedrooms, no mobile homes, 2) Homes on the lowest end of the market, 3) The largest home in the neighborhood, overbuilt, 4) areas of mass depreciation. Avoid these things, there are too many factors that will obstruct your cash.
You also need a real estate agent that knows how to package the deal for the bank. Everything up front and in the correct stacking order. It is also a great idea to use a real estate agent that will give up some of his/her commission to work with a professional bank negotiator. These negotiators assist in the transaction helping it move faster and they usually get the buyer a better price. Negotiators know what some banks will take and what others won’t. Most importantly they know WHO to talk to at the different lending institutions.
If you would like more information about purchasing investment real estate through a short sale, give me a call (206) 391-6224 or email me at boe@ashlarrealty.com
