Got Foreclosure! - Blog

Many real estate agents and investors are diving into the foreclosure “short sale” arena these days, and are asking themselves not only how to get deals accepted but also how to get paid…

Here is the problem: A lender taking a hit on a loan that has gone bad doesn’t want to take a loss and then see an investor reap a big profit by “flipping” the property to a “real buyer”. That’s understandable.

On the other hand: “Real buyers” don’t have the patience or luxury to wait 45 days before knowing if their offer has been accepted. - Who knows what’s going to change in the loan industry during that time? A buyer who is qualified TODAY for a certain interest rate and loan program has to act and buy NOW…

Go on to read the rest of this post, and download your FREE Short Sale Treasure Map…

Are lenders digging themselves into an ever increasing hole? After all, if the property doesn’t get sold as a short sale it will most likely go back to the bank. That means even bigger losses for lenders.

Also, what’s up with listing a property at a price that has not been approved by the lender as a short sale. I call these listings “speculative short sale listings”. The listing agent speculates that the lender might take an offer at that price, but it’s by no means guaranteed.

In the real market place these listings are irritating real buyers, because it appears that there is available inventory at very low prices. That is not true, though. Unless a short sale has already been approved, short sale listings cannot be taken seriously. That’s why they don’t sell.

So what’s the solution? Real estate agents can’t do it alone. You need a bona fide offer to get the bank to negotiate. That’s where a real estate investor comes in. For them it doesn’t matter so much if the lender doesn’t give an answer for 60 days or more.

Once the accepted offer is negotiated with the lender, a qualified buyer can move forward with a new loan. The price to that buyer can be a really good deal. Of course it has to be marked up to pay for the investor’s effort and time. But it will still be at a good discount.

Structuring the deal can be tricky, though, because the new lender wants to make sure that the property is worth what the buyer is paying (and the short selling lender wants to make sure they’re not loosing out on potentially higher payoffs…)

Many investors are confused and don’t know how to do this right (check out this “discussion” of “landtrust vs. option”), but don’t let it confuse you!

We have just closed two short sale transactions this week and created a lot of equity for the buyers. If you are an agent or seller talk to us if you need a real offer! You can also leave comments of your own short sale experience right here.

You can also read more about short sales on these blogs:

Short Sales in California by San Diego Real Estate Attorney

Short Sales in Twin City by a “Mortgage Banker”

P.S.: Remember to check out our Short Sale Treasure Map. Happy hunting!