Investor Concerns During the Short Sale Process
Buying a short sale property at a significant profit is no easy feat. Most of the time, an investor can only expect to make a modest amount on such a transaction. However, any potential that a short sale holds for an investor can go right out the window when the investor isn't well-versed in such situations. The short sale process is long and complicated; investors who are willing to go through it should educate themselves on the most important ins and outs that are involved. The following information can help.
Learning as Many Details as Possible
As much needs to be known about the short sale property as possible. Otherwise, an investor could get in over his head and waste a lot of time. Public records should be put to extensive use; in addition to knowing who is on the title, an investor should figure out if any foreclosures have been filed. Most importantly, an investor needs to learn how much is currently owed on the property. If two mortgage loans exist, the investor should drop the opportunity and move along to a different one; getting approval at any sort of reasonable price under such circumstances is practically impossible.
Hiring an Experienced Short Sale Agent
Short sales have become more popular than ever, but that doesn't mean that every real estate agent understands them. Savvy investors will take the time to find real estate agents who understand the intricacies of the short sale process. Having a knowledgeable and experienced agent at one's side is one of the most surefire ways to achieve success in the short sale game.
Getting Approval
The first approval that an investor needs to get should come from the seller. Just because the seller approves of an investor's asking price, though, doesn't mean that it's a done deal. The next step is getting lender approval, and that's usually a little more difficult than making the seller happy. After all, the lender is the one with the most to lose.
How can an investor sway a lender? One great strategy is showing proof of his own loan to the lender. Lenders like to see that prospective buyers already have financing in place - it shows that an investor truly means business. Another smart move to make is compiling a list of comparable sales in the area, then presenting it to the lender. This will help back up an investor's asking price, increasing the odds that it will be approved by the lender.
Prioritizing Short Sale Inspections
Short sale properties are almost always offered "as is." For this reason, the usual inspections and other guarantees are not in place. Investors need to make sure that they're getting their money's worth - at least - so they have to commit themselves to having those inspections performed. There's still a way for an investor to have inspections performed without losing out, though - he can make his offer contingent on the outcome of those inspections. This type of maneuvering requires carefully drawn legal documents, though, so the help of a lawyer is critical.
Investors can be winners in the short sale game, as long as they are willing to put in the time and effort to learn the ropes. Blindly jumping into a short sale is a surefire way to get the short end of the stick. Short sales require more work and patience than many other real estate transactions; still, the savings that can go along with them often make them well worth the extra effort. From doing a lot of homework about a property to lining up the right inspections, investors can make short sales work for them.