Practical Tips For Investing In Short Sales

When you’re a homeowner and you’re facing a foreclosure it can be a very unpleasant circumstance. You’re probably thinking about all the hard work, time, and money you’ve invested in a property that you feel you are forced to surrender. It can be a sad time as you look at your prospects. However, if you’re a buyer of a short sale property things can look very different. Looking at the deal from an investor’s viewpoint allows you to see high potential in taking advantage of this possibly lucrative opportunity. Still, there is always a possibility that things can go wrong so when you’re ready to enter a short sale transaction here are a few tips that will give you better leverage and a higher chance at success.

Be Thorough

It’s true that the lender is willing to take a loss but that doesn’t mean that they’re in a position where they’re forced to accept what you have. Make sure that when you place your offer for the property that you have submitted everything the lender has asked for. Keep in mind that it is not the seller that you have to impress but the lender who is trying to recoup as much of his losses as possible. The more thorough you are in the details provided to the lending institution the more likely they will give you the attention you deserve.

Know the Current Market Value

Before you make any type of proposal you should be very clear on the current market value of the property you’re considering and design your offer to be within a reasonable amount of its present value. Your first offer will tell you whether or not it’s in the right ballpark. If after your offer is presented the lender asks for an appraisal of the property you are on your way but if they come back asking you to raise your offer you know you’ve missed your mark and further negotiations may not be so forthcoming.

Be Prepared to Close

If your offer is accepted you need to be prepared to close immediately. There should be no reason for you to have to ask for extra time to pull your assets together. Closing within 2 – 4 weeks is a reasonable amount of time, anything over that may not be easily accepted and asking for an extension may put you in a bad light in the sight of the lender. If this is your only property that you plan to purchase then maybe it’s okay if the lender is a little annoyed but if you plan on using the property as an investment tool and expect to put it on the market for resell anytime soon a delay in closing could lead down the line to more problems.

Short sale properties can be an ideal opportunity for a savvy real estate investor but it does require a little forward thinking and careful planning on your part. With a little persistence and patience you will be well on your way to a future as a real estate investor for just a small fraction of the price you would normally expect to spend on the property you choose.

Basic Loan Structures For Real Estate Investments

For the average person considering buying their first home the realization of all the different decisions that need to be made can be overwhelming. One quickly recognizes that buying a home involves much more than finding the right place. In addition to shopping for the right home you also need to shop for the right financing and the right expert advisors as well.

The good news is that if you take enough time to research the different aspects of each phase you will not only save your money but you can even save your time and energy as well. Once you have determined the right short sale market where you invest in it is time to start your search for the right kind of financing.

There are many different types of loans that a potential homeowner can secure that can vary based on many different factors.

The Traditional Loan

These are fixed-rate mortgages that are extremely difficult to qualify for. The requirements for these types of loans are often very stringent and depend a great deal on a variety of factors including your credit score, income level, amount of down payment you have to offer and other expectations.

Fixed rate mortgages are not insured or guaranteed by the federal government and will usually require you to obtain your own mortgage insurance policy for protection. The advantages of this type of loan is the lower than usual interest rates and the fact that the interest will not fluctuate but will remain fixed throughout the lifetime of the loan. This provides the buyer with that added sense of security that can give them peace of mind.

FHA Loans

FHA (Federal Housing Administration) loans provide a variety of different loan programs for real estate investing. They usually require a much lower down payment than the traditional loan but are much easier to obtain. These types of loans are the preferred choice for first time buyers since their credit requirements have a simpler process they must meet than other financing options.

VA Loans

The US Veterans Affairs office guarantees loans for veterans. It is important to understand however that the VA does not actually issue loans itself but merely serves as a guarantor to many qualified borrowers allowing them to get into the home of their choice. With the VA backing your loan application it can make it that much easier for you to find the financing option that could get you into the home of your choice.

There are many other financing options to choose from for the new homeowner so it would be well-advised to carefully shop around for the one that can fit your circumstances best. While anyone may be able to recommend a particular short sale financing option it is important to understand completely that the choice you make should be based on your own personal circumstances and not on the opinions of others.

Purchasing your first home is one of the most exciting things you can do but when you approach it with an effective strategy you can take the sting out of the stress of shopping for your first home.