Foreclosure Short Sales

BUY LOW - SELL HIGH WITH SHORT SALES     

       One of the great secrets to creating rapid, significant wealth is to buy low and sell high.  In real estate investing that means mastering the secrets of buying properties facing foreclosure and using "loan mitigation" - sometimes called short sales.

       Your goal is to buy or control real estate at 60 to 75 cents on the dollar.  The plan is to buy real estate at wholesale prices and sell at or near retail.  How do real estate investors do that time after time?  You learn to work the "pre-foreclosure" market using short sales

NEVER ENDING SUPPLY OF SHORT SALE OPPORTUNITIES

       Real estate investors will find that buying homes just before a foreclosure sale is one of the most stable real estate investing opportunities in the country.  There is a never-ending supply of homes available to you.  Real estate will never go out of style and every consumer's desire for a home of their own is everlasting. That's what makes short sales so exciting.

       Once you understand how to profit from preforeclosure and short sale real estate you will find your knowledge is transferable.  You can move and live anywhere and make money investing in foreclosure properties.  There will be no 9 to 5 job to hold you back.  You truly can be on the road to financial independence with short sale real estate investing. 

        And, get this, homeowners in distressed personal and financial situations need your help.  They will welcome your professionalism, expertise and needed financial assistance.  They will urge you to complete a short sale.

HOME PRICES INCREASE

       Real estate short sale investing will thrive for the next ten years.  Prices for homes will continue to raise for a number of reasons:

1. Rising material costs - every year it costs more to build homes.

2. Environmental requirements - radon, asbestos, mold, water.

3. Land scarcity - cities becoming concerned about urban sprawl.

4. Increasing property taxes to finance expanding government.

5. Lack of affordable apartment housing.

6. Government sponsored loans to making buying easier, creating more demand and pressing prices higher.

      Yes, real estate investing is and always has been the way a determined person can start with zero and achieve financial independence in a relatively short period of time.

FORECLOSURE SHORT SALE RESCUE

       Some people have the perception that investors who work the preforeclosure wholesale market are taking advantage of some poor, unfortunate souls, behind on one or two months of payments after 15 years of faithfully making payments.  Wrong!

1.  The distressed homeowner has at least 6 months to sell the home at its full, retail value.  A lender generally waits three months before filing a notice of default (beginning the foreclosure).  Then it usually takes another three months (or more) for the foreclosure process to run its course before an actual auction sale of the property takes place.

2.  The average foreclosed loan has been in place just 12-24 months.

3.  Without the foreclosure system of enforcing loan repayment, mortgage interest rates would be prohibitively higher.  All  financial responsible homeowners would have to pay for the mistakes of other.

4.  An investor buying directly from the defaulting home owner prior to the auction sale protects the borrower's reputation and credit rating... and they can do that and profit using short sale tactics.

        It's true!...  Foreclosure investors play an important role in providing a distressed homeowner an alternative to losing everything through a foreclosure auction sale.  The investor's most powerful strategy is the short sale.

        Homeowners fall behind in their mortgage payments for many reasons; loss of job, a failed business, medical problems, divorce, death in the family, etc.

EASY MONEY = MORE FORECLOSURES = MORE SHORT SALES

       One of the major reasons for the current high rate of foreclosures is because people lack financial discipline.   With the readily available refinance money offered at attractive interest rates, property owners are pulling their home equity out in cash and spending it on consumer items.  Then if they have any unexpected financial set-backs they begin missing mortgage payments.

HOW TO FIND MOTIVATED SELLERS

1. Watch the newspaper Classified Ads -"Must Sell", "Vacant", "Motivated". "For Sale By Owner", "Lost Job".

2. For Sale By Owner - Watch for yard signs, Ask at garage sales, unkept properties.

3. Advertise - "I Buy Houses!"

4. Professional Contacts - Attorneys, Mortgage Brokers, Accountants, Insurance Agents.

5. Bird Dogs (pay for successful leads) - Neighbors, Letter carriers, Handymen, Family, Friends, etc.

THE SHORT SALE

        When you begin talking with distressed homeowners you'll find that many owe what their property is worth - they have near zero equity. Many investors walk away from those opportunities.  That's because they don't understand the Short Sale.

       A short sale means asking the bank to accept less than is what is owing on the mortgage... as payment in full. 

      Why would a bank agree to a short sale?  Because it makes financial sense. 

      It is expensive for the bank to foreclose, do any needed fix up work, offer the home for sale and then carry the home until a buyer is found.  Lenders are in the money business - not the real estate business. 

        There are several steps to short selling mortgages.   First you must have a purchase agreement signed by the homeowner.  Many investors are under the misconception that they can buy the property directly from the bank once a foreclosure has been started.  No you can't!

        The bank does not own the property until the moment the auction takes place on the courthouse steps. You must have your purchase agreement with the seller completed before the short sale takes place.

        You may be able to buy the mortgage from the lender at a discount and finish the foreclosure process, but you cannot buy the property. You must have the cooperation of the homeowner to effect a successful short sale. 

       After the homeowner has agreed to the sale you must have him or her sign an “Authorization to Release” form.  This gives the bank permission to speak with you about that particular mortgage... and the details of a short sale. 

SHORT SALE = BIG PROFITS

         Now you can call the bank and ask for the Loss Mitigation Department.  It's very important that you understand how to proceed from this point.  If you handle the negotiation incorrectly it could cost you tens of thousands in lost short sale profits. 

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