With the economic turmoil still looming large there are numerous people losing their homes to foreclosures. The only silver lining to this cloud is for buyers who are looking for good real estate deals in the form of foreclosed properties. Buying a foreclosed home is indeed an extremely profitable venture whether you intend to buy the property as an investment, to live in it or to rent it out. Most foreclosed properties are available dirt cheap and since most banks are overwhelmed by the sheer number of mortgage defaulters and foreclosures this is the perfect time to shop for a foreclosed home. Most foreclosed homes are typically auctioned. You could either go for short sales or foreclosed homes even though the former cost slightly more than the latter you can still get good value for your money.
What to expect?
Here are a few tips on what to expect when purchasing a short sale for home buyers.
Needles to say, a short sale property will be sold for less than the mortgage due on it. But the amount of this discount will depend on a variety of factors. The primary aspect is of course the actual or current market value of the property. If the lending institution feels that they can recover more money by selling the home as an REO or by letting it enter into foreclosure they may not take any short sale offers at all. Also, the lenders ability to bear a loss plays a major role. If the loss is to the tune of $100,000 the lending institution may be reluctant, and in such a scenario an agreement with the delinquent borrower that has a provision for the repayment of the difference in the amount recovered and the actual mortgage may help.
If this is the first time you are seriously considering opting for a short sale property, you can expect to find homes at really affordable prices which would be almost impossible under normal circumstances. Of course, this does not mean that you will be able to get your hands on a home for just $10,000 but even if you were to pay $75,000 for a home which is actually valued at $150,000 you have still made a killing.
But the only catch to short sale properties is the amount of running around that the buyers have to do. You need to remember that the lending institution will want to recover the highest amount possible so they may wait till a foreclosure is imminent and close before accepting a short sale purchase deal. The amount of time taken is simply increased for properties with two mortgages because both the lenders will have to approve the sale. In the two mortgages situation, normally one lender will be able to recover all their dues while the other will be shorted. Since, both the lending establishments will be reluctant to lose their money they will try and exhaust all options before taking the short sale purchase offer.
How to go about it?
If you are interested in buying a short sale property, get in touch with a real estate agent or mortgage lenders who sell short sales. But be ready to use time pressure tactics because the lender will try all possible tricks to buy some time to see if the borrower can manage to pay his dues. The normal waiting period should not exceed 4 to 5 weeks but if you have to wait for two months without an answer you should call your real estate agent and demand one within a week.
Opting for a short sale property is a good way to buy a house at a really affordable rate and enjoy high capital appreciation in the future.
Author Resource:
Michael Taylor is the broker owner of Red Door Real Estate and primarily sells http://www.reddoorindy.com/fishers-indiana-subdivisions.php Fishers neighborhoods and http://www.reddoorindy.com/fishers-real-estate.php Fishers Indiana real estate.
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