| How to Avoid Paying Too Much for a Short Sale Property |
How to Avoid Paying Too Much for a Short Sale Property
Have you heard that short sales are the alternative to foreclosure? They are and they are increasing in popularity. More borrowers and lenders are agreeing to them. For borrowers, short sales lessen the credit blow. For mortgage lenders, short sales allow the avoidance of costly and lengthy foreclosure proceedings. So, if you are looking for a great deal on a home or another property, don't discount short sales.
As nice as it is to hear that short sale properties often result in good deals, you may be curious as to what they are. Short sales are when the mortgage lender accept the fact their borrowers cannot pay. The property will soon enter into foreclosure. Unfortunately, foreclosure proceedings are long and costly. Plus, otherwise cooperative borrowers put up a fight when it comes time to vacate the property. In fact, some must be removed by force. This is more than many lenders want to handle. Instead, they opt for a short sale. This is when the home is sold for less than the outstanding mortgage due.
On average, short sale properties are a good buy. For example, if a home is valued at $125,000, the borrower owes $70,000 on the mortgage, and you are able to pay only $60,000 you make out well. Essentially, you get a steal. Yes, you do have to put up a large amount of money upfront, but think long-term. Whether you want to flip the property right away or live in it a few years before reselling, you automatically make a profit. After all, you paid $65,000 less than the home was worth! Even if you cover the cost of the mortgage, money is still made.
In most cases, short sale properties are a good buy. You get a good value for the money. However, there are cases in which buyers lose money. So, how do you prevent that from happening?
Know if a property is a short sale property. Lenders either opt to sell the homes themselves or use a third-party realtor. In either instance, they want their money. They may try to sell the home for more than the outstanding amount due. In some states, it is legal to not disclose the true status of a property. Essentially, it may be a short sale property, but you may not know.
So, how do you know if a for sale property is actually a short sale? Properties that are sold directly through the lender are almost always short sale properties. It is that or else the lender repossessed the home at a foreclosure auction. Either way, you can and should get a good deal. As for real estate agents, they may not outright state the status of the property, but most drop hits. Review the listing for phrases such as "lender must approve," or "in pre foreclosure."
Know the property's appraised value. This should be public records. If the appraised value is years old, hire your own appraiser or inspector. A quick examination will let you know if you are getting a good value for your money. A true short sale property should be less than the home's fair market value. In dire situations, where the lender wants to avoid foreclosure at all costs, they don't even consider the fair market value. They just want to recoup as much of their money as possible.
Know if a home is underwater. A problem facing many homeowners today is that they owe more than their home is worth. This is common with second mortgages or homes that were purchased during the real estate boom. If a home is underwater, proceed with caution. Remember, not all lenders take a home's value into consideration. They just want their money. This typically works out to your advantage, but not with underwater homes. For example, a home may be valued at $250,000, but the borrower owes $300,000. Even if you pay the $250,000 you don't get a good value for your money. Yes, you are purchasing a home at fair market value, but your goal is to get a good deal. Unless buying a first home that "you must have," walk away.
In conclusion, most buyers get good deals with short sale properties, but there are no guarantees. For that reason, do the research first. Don't spend more than required, especially if your goal is to profit from the buying and reselling of short sales.
PPPPP
Word Count 734
|
Buying Short Sale Properties: The Importance of Preparation If you watch television or use the internet to catch up on ...
read more
Buying Short Sales: Dos and Do nots Do you want to profit from the real estate market? Now, it is ...
read more
Buyers: How to Convince a Mortgage Lender to Agree to a Foreclosure Short Sale In the United States, most properties ...
read more
First Time Buyers: What to Expect with Short Sales Do you want to profit from the real estate market? Even ...
read more
Foreclosure Short Sales: How They Get Started Are you looking to profit from the poor real estate market? If so, ...
read more
First Time Homebuyers: 5 Reasons to Examine Short Sales Are you looking to become a first-time homeowner? If so, you ...
read more
Homeowners Options to Avoid Foreclosure If you are looking to profit from the poor real estate market and the large ...
read more
How to Avoid Paying Too Much for a Short Sale Property Have you heard that short sales are the alternative ...
read more
Buyers: How to Convince Borrowers to Opt for a Short Sale Here is the scenario, you see a great home ...
read more
How to Find and Buy Short Sale Homes In terms of the real estate market, it is a buyers market. ...
read more
Landlords: 5 Reasons to Examine Foreclosure Sales If you own and rent just one piece of property you are consider ...
read more
Making Money with Foreclosures: Your Options Reviewed The poor economy has left the real estate market in poor condition. Many ...
read more
First Time Investors: 5 Reasons to Examine Short Sales With the current state of the economy and the real estate ...
read more
The Pros and Cons of Buying Foreclosure Short Sales Are you interested in profiting from the growing number of mortgage ...
read more
Pros and Cons of Buying Short Sales as First Homes In terms of short sales and foreclosures, a lot of ...
read more
Short Sale Information: What You Need to Know as a Buyer Are you looking to profit from the poor real ...
read more
Foreclosure Short Sale Information: Frequently Asked Questions Are you a first-time real estate buyer? If so, now is the time ...
read more
Short Sales and Underwater Properties: What You Need to Know Do you want to profit from the current state of ...
read more
Short Sales: Should You Let the Sellers Rent? If you are interested in buying and profiting from short sale properties, ...
read more
Short Sales versus Foreclosures: Which Should You Buy? Whether you are looking to buy a cheap first home or profit ...
read more
Foreclosure Short Sales: What They Are and How to Profit Unfortunately, the year 2008 will not be associated with happy ...
read more
Which Short Sales Are the Best to Profit From? Do you want to profit from the buying and reselling of ...
read more
Who Benefits From Foreclosure Short Sales Do you want to profit from the poor real estate market? If so, examine ...
read more
Why Foreclosure Short Sales are Good for Homeowners With today's troubling real estate market, there is good news. That good ...
read more
Why Lenders Agree to Short Sale Foreclosures Are you looking to profit from the current real estate market? Ask any ...
read more
|
|
|
Disclaimer:
The Publisher has strived to be as accurate and complete as possible in
the creation of this website, notwithstanding the fact that he does not
warrant or represent at any time that the contents within are accurate
due to the rapidly changing nature of the Internet.
This site
is a common sense guide to How to Avoid Paying Too Much for a Short Sale Property. In practical advice websites,
like anything else in life, there are no guarantees of income made.
Readers are cautioned to reply on their own judgment about their
individual circumstances to act accordingly.
This site
is not intended for use as a source of legal, business, accounting or
financial advice. All readers are advised to seek services of competent
professionals in legal, business, accounting, and finance field.
Any
perceived slights of specific people or organizations are unintentional.
|