Learn Profitable Short Sale Investing

Short sale investing involves buying a piece of property from a lender for an amount less than the balance owed on the property. Basically, there are two types of short sale realty investments. The first type refers to when you purchase a property, foreclosed by a lender listed with a realtor. In this type, you simply offer the lender, who has now become the owner on record, less than what is owed on the property. In this case, you can offer less than the balance that was due on the foreclosure. Such a short sale, realty investment calls for a good relationship with the realtor. The other type involves negotiating directly with the lender of a motivated seller. It is essential to be determined in the negotiation process, mainly in reaching the right person at the lender Real Estate Owned (REO) department and then to get the price of your choice.

The advantage to buying a property at a foreclosure auction is that you can often pay far less than you would have under normal circumstances. Frequently you can invest in improvements and then sell the home for a much higher price than your cost.

The disadvantages and risks are more numerous. Simply to participate in the auction you must have sufficient funds available (either cash or a cashierÂ’s check) to cover 10% of the purchase price. You also must be able to arrange for financing within thirty days to complete the purchase or you risk losing your deposit. Next, youÂ’re buying the property as-is, without inspection. The condition of the interior of the home is usually a complete unknown. YouÂ’ll have to be sure that the price you pay is low enough that you can still afford to make significant improvements or repairs.

With the high rise in foreclosures these days, even those who do not invest in real estate are starting to hear the term “real estate short sale” or “mortgage short sale.” A simple definition of a short sale of real estate is an investor or buyer making a deal with the primary mortgage holder to accept less than the amount due on a mortgage; rather than the lender taking over the property through the foreclosure process and then ultimately loosing money on the property by selling it at a foreclosure auction.

One of the most prevalent trends in today’s real estate industry is the sale and purchase of pre-construction properties. This kind of real estate purchase has some particular assets and for this reason, has become a favorite of real estate prospectors all over the country. Typically, while in the pre-construction phase, builders offer great deals on soon-to-be homes. The idea being that buyers can pick homes or properties up at a reduced cost and benefit from the short-term appreciation. Many of these properties are then re-sold upon completion for a tidy profit.

How can I identify discounted REO properties?

My partner and I are looking to purchase the “left-overs” at a discount… the REO properties that the agents have had on their desks for a few months and cannot sell. However, we have had absolutely no luck in being able to contact the REO departments. We are willing to buy in bulk or individually. Does anyone know how to go about contacting the lenders for this kind of thing? This is a win-win for everybody if we can just figure out who to call.