The real estate market crashed leaving many homeowners upside down in their homes. Many were unable to continue to meet their financial obligations and started defaulting on their loans.
Investors ran to the wave of opportunities within the foreclosure market. Many, however, became discouraged because they found many homes with no equity in them.
That was until they learned about short sales.
In these situations, the home owner owes more to the bank than what the home is worth. This creates a problem in that no buyer will pay over market value and without the bank discounts the amount owed, the home can not sell.
The bank is usually motivated to negotiate a short sale because the home owner is often already in default,
and the home will be going to foreclosure unless they discount the loan amount owed.
If they fail to negotiate the short sale, then the bank will have to take the property back. When this happens
the home becomes a bad asset and the bank must keep seven dollars for every dollar in bad assets which they can not lend.
So if they take back a $ 100,000 home, the bank can not lend $ 700,000. Since they make money by lending, taking property back through a foreclosure hurts them more than discounting the loan amount.
This strategy is a way for a buyer to get into a property by getting the bank to discount the loan to an amount that leaves the buyer with a strong equity position if negotiated right.
If you are looking to get into short sale investing what you need to know is …
How to prepare and put together a short sale package.
Where to find home sellers who qualify to sell their homes using this method.
How to negotiate with the banks so your file does not end up at the bottom of the pile.
When you are able to negotiate a short sale you will be able to invest in real estate even if the market is