Foreclosures are at an all time high and it seems as if more and more homeowners are facing a notice of default. Because of this higher inventory, Investor interest in foreclosures and short sales have skyrocketed. Often times, an investor or homeowner can purchase a foreclosure or short sale for less than he would in an equity sale. Many believe that the Real Estate Market has… or is close to bottoming out. Now could be that perfect time to consider purchasing as a first time homebuyer, investing in a rental property or upgrading your current primary residence.
Below are some benefits of purchasing a short sale.
In many cases, short sales can be purchased at or below market value. The bank is already in agreement to take a loss on the home and they are not in the business of holding foreclosures. Without a doubt, competitive prices are the most notable reasons for investors to look into short sales. The less money that you have to part with from the start the higher your profitability and/or return on investment is likely to be.
People who have purchased foreclosures in the past are all too familiar with the mess that is often left behind with foreclosures. Disgruntled homeowners often trash their homes before banks officially take possession of them. This costs the banks and investors not only time but money and can drastically subtract from their overall bottom line. investors must spend considerable amounts of time and money on repairs in order to make such properties marketable. Homeowners are involved in the short sale process themselves and have a vested interest in the transaction closing. For this reason, short sales are in much better condition that traditional foreclosure sales.
When buying a foreclosure from a bank, the bank often leaves a lot of unexpected conditions for investors to face. The bank hasn’t been living in the house and is not as familiar with the structure as the original homeowner was. For this reason, investors cannot get information about the home’s unique history. With a short sale, an investor can usually still ask the homeowner questions about the home and find out vital information about the condition of the property before formally committing to the sale.
When a bank markets a foreclosure, It usually will higher an asset management company to manage their inventory. This creates another hurdle to jump through and can cost extra time in an already unstable economy. During the short sale process, most of the negotiations take place before the banks and investors even enter the picture. The bank and the seller come to an agreement about what the property’s asking price will be. Once this is established, a short sale approval is issued and the transaction can be closed.
Investors Can Benefit from the Short Sale Process
Although the advantages and benefits of a short sale may not be readily apparent to an investor, the truth is that they are very real. However, it is important to bear in mind that not all short sales bring these benefits to the table. Investors should take their time while investigating short sales in their local area in order to find the ones that have the most reasonable terms.