BEGINNERS GUIDE TO FINDING BARGAIN PRICED FORECLOSURE PROPERTIES LEX LEVINRAD
For this reason many banks are taking short sale offers from investors
much more seriously and are even willing to pay money to the
homeowner to accept a short sale and avoid the foreclosure auction.
SHORT
SALE
From the banks’ perspective, putting more properties on the MLS will
just flood the market with inventory, which will further reduce prices and
increase their losses. It makes much more sense for the bank to
ensure that this inventory never hits the market. And there are only two
ways for this to happen. Either the loan has to be modified, or the loan
has to be sold. In many cases it makes more sense for the bank to
accept a short sale offer, than to sell a bad loan in the secondary
market for mortgage notes. For this reason, accepting a short sale offer
makes a lot of sense for banks with defaulted mortgages, where
homeowners are facing foreclosure. As an astute real estate investor
you can tap into this opportunity.
A short sale is where the bank agrees to take less than the full amount that is owed to them on the original
note and mortgage. Savvy real estate investors can submit short sale offers to the bank to buy properties
directly from homeowners in foreclosure and can bypass the foreclosure auction entirely.
Accepting a short sale offer makes sense for the bank as well as the homeowner. The bank receives as much
as they can for the property, without incurring the costs and legal expenses of pursuing a foreclosure lawsuit.
The homeowner avoids having a foreclosure on their credit report (which lasts 10 years) and gets to walk
away from the property without any consequences (other than the short sale on their credit report). In most
short sales, the bank agrees to a non-deficiency judgment, which means that they will not sue the homeowner
for the difference between the original mortgage and the amount that the property finally sells for. Most short
sale investors make this part of the short sale offer.
So if you are thinking about taking advantage of discounted
foreclosure bargains in your area and you do not want to
compete with all of the REO listings that are on the MLS,
then you simply need to find homeowners that are in
foreclosure who are willing to sell their home via the short
sale process. Any homeowner in foreclosure who is
planning on walking away from their property would be
happy to have a completed short sale instead of a
foreclosure on their credit report.