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Pros And Cons of a Short Sale in Real Estate Investing Header image

Pros And Cons of a Short Sale in Real Estate Investing

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Short sales and other types of distressed sales (foreclosures, bank-owned sales, etc.) make up about 12.5 percent of all home sales.

Some people think that short sales are a bad thing, but that’s not always the case. There are some definite benefits to them from an investment perspective.

If you’re considering buying a short sale home, keep reading.

Explained below are some of the pros and cons of a short sale for real estate investors. You’ll also learn more about the process and the best way to handle it.

What Is a Short Sale?

A short sale is a tool for distressed borrowers. Distressed borrowers are those who are behind on their mortgage and/or have a home that’s underwater (meaning it’s worth less than the balance on the mortgage).

When a homeowner short sells their home, they typically initiate the process. This is different from a foreclosure, where the bank informs the homeowner that they’ll be foreclosing on the house. Short sales still have to be approved by a lending institution before the homeowner can move forward.

Once the lender has approved the short sale, the homeowner will negotiate with a buyer to agree on a sales price for the house. Then, the lender will approve the purchase.

Many homeowners choose a short sale over foreclosure because short sales have less of an impact on the seller’s credit score (compared to foreclosure).

For more information on your credit score and credit repair, click here. 

Pros and Cons of a Short Sale

There are pros and cons of short sales for homeowners, but they’re not the only ones with skin in the game. There are also pros and cons for investment buyers looking to purchase short sale homes.

The following are some pros and cons you ought to keep in mind if you’re considering buying short sale:

Pros

When you buy a short sale home, you can often get a good deal on a property. Because the homeowner and the bank both want to sell the home quickly, they usually offer it at a lower-than-average price.

There’s less competition for short sale homes, too. The short sale process is quite lengthy, and most people don’t want to wait around for it to be complete. There’s less of a chance that you’ll get caught in a bidding war for a short sale home.

Buying a short sale home is also much less risky than buying a foreclosure. Homeowners usually occupy their home while short selling it. Because they’re the ones handling the sale, they’re less likely to damage the property or neglect it.

Cons

When we say that the process of buying a short sale home is lengthy, we mean it. It takes several months — sometimes even up to a year — to get the sale finalized. Creditors have to approve the offer along with the seller, and the escrow process often takes much longer than average.

It’s important to note, too, that you might not always get a great deal with a short sale. Don’t just assume that you’re getting the lowest price possible. Sometimes, when the lender wants to recoup as much money as they can from the sale, they’ll raise the price of the home.

Often, short sale homes need a lot of work after they’re purchased. The owners might not have neglected or damaged it, but they also might not have taken as good of care of it as possible.

If someone is short selling their home because they’re in a difficult financial situation, they likely haven’t been doing as much maintenance as the average homeowner. There might be issues with the plumbing or the roof that require immediate attention and can be costly to fix.

Short Sale Tips for Investors

If you decide that you want to take on investing in a short sale home, you’ll need to be strategic. Here are some tips that will help you ensure you’re getting the best deal possible on a short sale home:

Do Your Research

Do plenty of research before choosing a short sale home in which you want to invest. Look at online listings and search courthouse listings to find short sales in your area.

When choosing a home, figure out how much is owed on it relative to its value. Look for homes where a high amount of money is owed — you’re more likely to get a good price on these homes as opposed to ones where the owner has lots of equity.

Ask About Liens

Be sure to ask the owner about liens on the home. Liens are payment agreements between a buyer and a lender.

Find out the lender that is the primary lien holder as well.

It’s a good idea to confirm the information about the liens by conducting a title search on the property first.

Figure out Your Finances

To speed up the short sale process, it helps if you know exactly how you’re going to pay for the investment property.

Do you have the cash ready to go? Have you been pre-approved for a loan?

If you can prove that you have the money and are ready to purchase, you’ll have a much easier time buying the house quickly and the right price.

Examine the Property

Finally, don’t forget to examine the property. Take a good look around it yourself to see if there are any obvious repairs needed.

Reserve the right to have the home professionally inspected, too. Make this a condition before you sign anything or agree to buy the home.

Learn More About Short Sales

As you can see, there are a lot of pros and cons of a short sale that you need to take into account before you dive in and invest in a short sale home.

Keep this information in mind (especially the tips on buying short sale homes) so that you can make the best investment choices for yourself.

Do you want to learn more about short sales? If so, be sure to check out the Short Sale section of our website today.

You’ll find all kinds of helpful articles here that will teach you everything you need to know about short sales from both the buyer and the seller perspective.

What is a Short Sale?

What is a Short Sale?

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Photographer: Helloquence | Source: Unsplash

Mortgage default rates in the U.S. have been dropping for the last ten years. According to the Consumer Financial Protection Bureau, mortgage delinquency rates have decreased by half since 2009. However, there are still plenty of Americans under the threat of foreclosure. Many are opting to make a short sale on their home.

Foreclosing on your home can have a number of downsides, including credit damage, the inability to get relocation assistance, and difficulty renting a property. This is why alternatives should be considered before you go through with it.

Now, it's important to note that a short sale isn't the right move for everyone. You need to be in a unique position for it to be beneficial. That's why educating yourself should be your first move.

Let's break down the basics of a short sale and go over some pros and cons.

The Fundamentals of a Short Sale

Sometimes homeowners end up in a situation where the value of their home is less than the remaining balance on their mortgage. Maybe they've been unable to make necessary repairs and maintain the value of the home. In many of these instances, the homeowner has suffered financial setbacks that have caused them to miss mortgage payments.

These scenarios often end in a foreclosure, but this isn't the only route. Another alternative is a short sale, in which the home goes on the market for less than the remaining mortgage balance. Homebuyers can negotiate with the sellers on a price and then seek approval from the lender.

This may not seem like a logical move for the mortgage lender, which is usually a bank. Why would they want to take less than what is owed by the current owner? It turns out there are some reasons why a lender would want to move forward with a short sale.

It's important to note this transaction can't happen without approval from the lender first. After all, they're the ones taking on more risk. However, sometimes a foreclosure is more costly and time-consuming for the bank. If the conditions are right, approving a short sale would be in their better interest.

Understanding the Process

The requirements for carrying out a short sale vary from state to state. However, the steps are generally the same. If you're considering this type of home sale, you need to make sure you understand the process and seek professional real estate advice if you have questions.

The first step involves submitting several documents to the lender. These include financial records and an explanation as to why the short sale is occurring. Once the seller gets an offer from a buyer, the real estate agent involved will need to send some items on behalf of the buyer. These include the offer, pre-approval letter, and a copy of the check for the earnest money. The bank will then review everything and either approve or deny the short sale.

If the sale is approved, it proceeds very similarly to a normal home purchase, with a few small differences. For example, the contract will state that the terms of the sale depend on approval from the bank. The home will also need to be purchased "as-is." While the buyer can still have the home inspected, negotiating for a lower purchase price based on the outcome of the inspection isn't an option.

Buyers should understand that even though they're paying the lender, the bank probably won't make any repairs. Plus, because the current owner is most likely in financial distress, they won't either.

Benefits of a Short Sale

On the surface, a short sale may not seem like the best idea. However, there are a number of advantages for both the seller, buyer, and lender. Granted, it's not the best scenario for the sale of a home, but we don't live in a perfect world.

For the seller, the biggest benefit is avoiding foreclosure. The foreclosure process can be stressful, costly, and ruin a person's credit. While a short sale won't look good on the seller's financial record, it's much less damaging than a foreclosure. Plus, the seller is absolved of further mortgage payments.

For the buyer, the main benefit is the ability to purchase a home at a lower price. Yes, they're buying a house that most likely has issues. However, if they have the means to perform renovations and they love the property, it's a good move. The buyer in a short sale may also be able to negotiate financing terms with the lender. Finally, because the seller is motivated, the process typically goes over smoothly.

Lenders can benefit from a short sale as well. The main advantage is that they're at least getting some of the remaining mortgage balance. This is better than nothing. Plus, the foreclosure process is a huge burden many lenders want to avoid.

Disadvantages to Consider

While a seller may be out of the woods when it comes to the threat of foreclosure, they'll still experience some drawbacks after a short sale. That's why it's important to weigh all options if you're considering moving forward with one.

There's a chance the lender will report the seller to the credit bureaus. This can damage the seller's credit score. However, this can take a while to happen and it's hard to gauge the extent of the damage.

Another disadvantage is that there's no way to know whether the short sale will be approved by the bank. It also may take a while for the bank to make a decision. This can be a stressful time, especially if the seller is experiencing major financial hardships. Plus, the bank will most likely go through all the seller's personal finance information, including tax documents, assets, and bank accounts.

Finally, a lender may opt to file a deficiency judgment due to the difference between the price of the home and the outstanding mortgage debt. This could result in the deficient amount going to collections or a lawsuit being brought against the seller by the lender. These things could happen even after the short sale has gone through.

Resources:

https://www.consumerfinance.gov/data-research/mortgage-performance-trends/mortgages-30-89-days-delinquent/

https://www.thebalance.com/deficiency-judgements-after-foreclosure-1798478

How do I know a Short Sale is Right for Me?

How do I know a Short Sale is Right for Me?

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Photographer: Eric Muhr | Source: Unsplash

Is a short sale a good idea? Well, that depends. As with any kind of investment, there are many points to consider before making a final decision.

For instance, are you selling or buying the house? What is your financial situation? These are all relevant points. In order to decide, you need to understand what a short sale is, its advantages, possible mistakes that you may commit and how it all applies to your specific situation.

What Is a Short Sale?

Life is full of ups and downs. Sometimes you commit to huge investments and then something happens. You can lose your job, for instance, and only find another one that pays considerably less. If your investment was a house and you've still got a mortgage to pay, then you can face a real problem.

The failure to pay the mortgage will damage your credit score and it can lead to a foreclosure. Fortunately, most banks never want to go down that road because everybody loses. So, in order to avoid trouble, several lenders can agree to have a short sale.

What is a short sale, then? It’s when someone decides to sell a residence for less money than what the person owes to the lender. The rest of the payment is forgiven.

Let’s look at this example. Someone still owes $200,000 to the bank for a house that originally cost $300,000. With a short sale, the person can sell the house for $175,000 and the bank will forgive the other $25,000.

Why would a lender do that? Wouldn’t it be losing money? Actually, no. Short sales can only happen during very specific situations that protect the lender.

In order to participate in a short sale, some rules have to be followed. The first one is that the house needs to be valued at less than the amount of money that the person paying the mortgage owes to the lender. This means that its value needs to have decreased considerably before now and the current owner has negative equity.

In the example from before, the house, which was bought for $300,000, would need to be valued at less than $200,000 now.

The other rule is that the lender needs to give permission in order for the deal to move forward. Without this agreement, nothing happens.

The Advantages Of A Short Sale

Short sales can present several advantages for both the buyer and the seller. Most of all, though, they present a huge advantage to lenders: they lose less money this way. The main reason for them to accept these deals is that they know that they have already lost the money anyway.

As the value of the house has gone down and the person who bought it is not even paying it anyway, any profit is profit.

The buyer can also benefit, because he/she has already lost money in this investment. For both the seller and the lender, a short sale can be great because it is really a way out of a huge mess.

That said, there are additional advantages to the seller. Your credit score will probably recover quickly after the sale is done. You can also avoid foreclosure, which is always a huge headache. The main advantage, obviously, is to go mortgage-free and finally have some peace of mind without owing a huge amount of money.

If you are a potential buyer, though, you should be asking yourself: don’t I get any advantages? Well, you certainly do, although they are not as big as theseller's.

Short sales are a great way to buy houses way below their market value. You can get huge discounts if the prices are considerably low and the house has no problems. This, however, is when most investors make a mistake. They do not know all the pitfalls that a short sale can bring if they are not careful.

The Most Common Mistakes During a Short Sale

If you are a buyer, this advice is for you: take care. Buying a house during a short sale means that there are considerably more chances that it may have issues. The last owner probably had financial troubles, so many things about the property may not be in order.

For instance, utility bills may be unpaid. Repairs may need to be done. Be sure to make an inspection before closing the deal. Sometimes that great investment is not really good when you see how much money you will spend later to fix it. Buying a house that does not need a lot of repairs is the best idea if you really don’t want to spend a lot of money.

Another good idea is to always visit the house accompanied by professionals. They are trained and will help you to spot any problems that may turn into inconveniences in the future.

It is also very important to consider is that there is a long wait before a short sale. The timeline for waiting for an answer can be a real pain for you if you are not willing to wait a lot. Offering a big payment can help you, but there are no guarantees.

You should know that other people may be interested in the house as well and that they may be the ones who will get to buy it. There is not much you can do about that, unfortunately.

Do Your Homework: Research Before The Short Sale

While a short sale can seem like a great idea at first, being prepared is essential. Whether you want to sell or buy the house, researching a lot is a necessity.

If you want to sell the property, you should do the math and determine if getting rid of this problem by losing the house is worth it. Sometimes, if you can pay the rest, it can still be a decent investment. However, in some situations (such as not having the money to pay at all) selling the house is the best outcome.

In case you are looking to buy a new home, you should check your priorities, follow all tips about the most common pitfalls and really do a lot of research about the property and its condition before deciding.

Four Things You Should Know About the Short Sale Process

Four Things You Should Know About the Short Sale Process

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Banks don't want to lose money. The bank is absolutely going to lose a lot of money if someone forecloses on their house – but less so with a short sale process.

Foreclosures are what happens when the owners can't pay their mortgage and the bank sells the home to the highest bidder, trying to recover some cash, as they're technically negative on that house. You can see some homes, that are valued at $200,000 or more, foreclosing for under $100,000.

It's a great deal for the buyer, but not such a great deal for the bank. A short sale, on the other hand, is a step above a foreclosure. The bank is still going to lose some money in the transaction, but not nearly as much as they would with a foreclosure.

And if you're looking to buy a house, happening upon a short sale seems like you've hit the lottery – but the short sale process isn't for the faint of heart. Want to learn more about it and see if it's the right strategy for you? Keep reading.

What is a Short Sale?

Imagine that you bought a $200,000 house. You put 50,000 down as a down payment (good for you!) so your mortgage is 150,000. Now for whatever reason, you can't afford your mortgage anymore. You can't pay your bills and a foreclosure is looming.

What do you do? You, as the seller, could look into a short sale. You put the house on the market at a low price, and collect offers. Then you go to the bank and tell them "we can't afford to pay back all 150,000 – but would you accept one of these 50 offers that are less than what we owe, but aren't as costly as a foreclosure?".

The bank then looks through the offers and says yes or no. If they say yes and accept a particular offer, the people essentially sell their mortgage for less than it's worth back to the bank, in exchange for their home.

But do you see the catch there? It was hidden, so if you didn't, no worries. Here's the issue: short sale homes can collect tens or even hundreds of offers. That's not such a good thing for a buyer, who thinks they're getting an unbelievable deal and are just "waiting on the bank's approval".

In reality, there's a very, very small chance that a buyer's offer is accepted on a short sale home, just due to the volume of offers.

What is the Short Sale Process?

That's not to say that a buyer can't get a house at an unbelievable deal with a short sale. It's entirely possible – but you can't get too emotionally attached to one house (or one low price). If you want to "win" a short sale, here are four things you need to know.

1. Bulk it Up

If you're determined to get a house for a really good price through a short sale, you have to put in offers on a lot of houses. One investor who makes YouTube videos says he and his team put in 100 offers on different short sales every day.

Then, months later, they might win 1-3 out of those 100 short sales. It can take that long and be that competitive.

And here's the issue with that for most people. They don't have the capital to go through with three short sales, even if we were to win them. So how do you amend that strategy for someone with a more realistic budget?

Keep putting in offers on short sales, but don't do 100 a day. Maybe do one every other day, if the house is in your area. A short sale isn't something you want if you have to move in ASAP. It can be months before the owners even take the offers to the bank, let alone get them approved.

2. Know When to Engage in the Short Sale Process

Short sales are not quick sales, even though the "short" in their name makes it sound like they are. It takes longer to go through with a short sale than it does to buy a house the conventional way.

That's to say, you have to know when to start the short sale process. If you're just starting to think about moving but you still have six months to a year, then you could play the short sale game. But if it's May and you have to move by August – skip the short sale process.

If you put all your eggs into that basket, you could very well find yourself moving into a too-small apartment and still waiting on approval come August.

3. Make a Higher Offer

One good way to get a head start on short sales is to research the true market value of the home. Sites like Zillow make this easy, and you can see what homes around it are worth. Now – you absolutely shouldn't offer the full market price.

That defeats the purpose of a short sale. But if it's listed for 50% of what it's worth, come in at 70% or even 75%. Remember – you don't really care what the owners think of the offer, it's more about what the bank wants.

And the bank is going to lose money on this sale, no matter what. So if you can make that gap smaller for them, they're more likely to approve your offer.

4. Be Very Patient

If you haven't figured it out yet, short sales aren't for people that lack patience. You're not just going to get that good of a deal without paying some sort of price. In this case, the price is time.

If you can put up with waiting then you're ready to play the game.

The More Offers the Better

Now that you know about the short sale process, what do you think? Will you try to get a home for a good deal, even if it means waiting a while? Let us know.

5 Reasons a Short Sale is Your Best Option

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Often people hear about the concept of a short sale and think it means the homeowner is in default on their loan. But that’s not always the case. Default is not necessary with every short sale. And not every short sale is caused by foreclosure.

Short sales occur when a bank decides to take a lower payoff than the overall balance of the loan. The amount of the mortgage is not a crucial component. What’s significant is your home’s price and market value. If your house is worth more than the mortgage, you may do a short sale.

This can be done as long as the net profit is below your loan’s total balance.

Despite common beliefs, your house doesn’t have to be underwater or upside down to do a short sale. An “underwater mortgage” is a home loan that has a greater principle than the value of the house on a free market.

It’s the bank’s net proceeds that determine if the house can be a short sale. If the sale’s net income is less than the outstanding balance owed on the loan, that home will be a short sale. This can happen even if the property is worth more than just the mortgage.

Here are 5 reasons why a short sale can be your best option:

1. You Can Short Sale Without Defaulting

 While many short sales involve a residence in foreclosure, a pending foreclosure doesn’t always mean a short sale.

To prevent making mortgage payments, not every bank needs a short sale. Some people can actually qualify for a short sale without being in financial difficulty.

With banks, just the chance of a default on a loan can qualify the seller for a short sale. The seller doesn’t always need to be behind on the loan.

If a seller can initiate a short sale without reporting late payments on a loan, this can lead to a stronger FICO score for that seller, rather than the alternative ding to one’s credit.

2. You Can Stop Worrying about Foreclosure

 There are numerous reasons why a borrower may not be able to make mortgage payments.  Financial hardships and unforeseen life events are completely understandable.  “Expect the unexpected,” right?

When you fail to make your mortgage payments for anywhere between 3 to 6 months, the failure to pay is usually met with a notice of loan default.

If the borrower wants to try and stop the home from going into foreclosure, they can attempt to enter a settlement of the debt with the lending bank. This settlement is what’s done in the form of a short sale of the home.

3. You Can Save Your Credit Score

 From an individual credit score perspective, a short sale is extremely preferential, particularly when judged against the possibility of foreclosure.

Credit scoring companies take a dark perspective on foreclosures and will file a lower credit score than to someone who carefully examined their options and decided to go with a short sale as the alternative.

Not only does it protect a person’s credit score, but it also keeps them in the playing field and allows for an easier home buying process in the future.

4. You Can Preserve Your Future of Home Buying

In many cases, the largest financial moment in an individual’s life is buying a home and taking on a mortgage. Preventing the worst case of a foreclosure, a home seller can more easily justify a short sale, such as deciding to move elsewhere for example.

On the flip side, buying a home after a foreclosure, and the resulting destruction of a person’s credit will be nothing less than a nightmare and a half!

5. You Can Avoid the Sales Fees

 

With the traditional sale of a house, the seller carries the strain of payments and fees. This includes paying commission rates to employed real estate agents.

These real estate agent fees can generally cost the seller up to six percent of the final sale of the house. But with a short sale, these fees and commissions are paid to the agents by the bank.  Direct savings for the seller!

Short Sales: Summarized

Typically, an interested buyer will make an offer that meets the values of the property. But often a seller is not in the position to accept such an offer, because the bank is the deciding factor.

In these instances, the lender must approve such offers since they are lower than what is owed on the home loan itself. The seller would then complete an application for a short sale along with the supporting information to be submitted to the lender.

This supporting information may include a letter indicating the seller’s hardship and the reasons for the inability to pay back the difference of the potential offer from the buyer.

Often, proof of income, as well as tax returns, are needed to show evidence of the hardship. An appraisal of the home will be done, and if it ends up reflecting a home value that matches the offer from the potential buyer, the bank may choose to accept it.

 

Other Considerations for Your Short Sale

Remember, this is not a quick or easy process.  It usually takes several months to go from start to finish. To make up for its financial loss, the bank will often require that the home buyer pays for the closing costs of the home as well as repairs.

Once your short sale is complete, the debt is settled, and you are free from the debt and payment. To sum it all up, a short sale is much better for your credit score and your future than a foreclosure is. So, remember, your best bet may very well be a short sale.

The First Steps Everyone Should Take Before Investing In Real Estate

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While it is quite common for everyone to seek some form of financial security through real estate, making wise investment decisions can often prove more difficult than they may realize. One of the first mistakes that people often make is not realizing that buying real estate is not the same as buying a retail product. One must have a systematic approach and recognize that much more is involved than finding the property you want and writing out a check.

Once you understand that purchasing real estate is more about the process than it is about the sale itself you’re well on your way to making good investment decisions. When you recognize the different stages of buying investment property the entire experience will become far more manageable than one might realize.

Step One – The Realtor

One of the biggest decisions you’ll have to make is to choose a good realtor. This should not be made casually as you will need to rely on that individual’s professional knowledge and expertise to lead you in the right direction. When you consider the weight of the choices you make in the different aspects of real estate investments you need to be absolutely sure that the guidance you get from your realtor will not lead you in a way that could cause you problems in the future. Unlike other investment options, real estate investments require a commitment that will take many years to satisfy. A good realtor could be your best ally or your worst nightmare so the choice you make will be one that you’ll have to live with for a long time.

Step Two – Prequalify for Your Loan

While some people will start their real estate search by looking at different homes before they begin the loan process there is good reason to get a prequalification from your financial institution. Even though this step is not a requirement many well-established and experienced realtors do expect it. One of the reasons for this is because it gives them the opportunity to identify you well ahead of an in person meeting and it also sets a price range that will help you to narrow down your search for your new property.

Prequalification is not the same as actually applying for a home loan; it takes only moments and can be done over the telephone if need be. If you have chosen a good realtor then they will be able to refer you to some of the more trustworthy lenders in the area. However, if you choose not to prequalify for a loan it is quite likely that you may be limiting yourself from some ideal properties that may be available.

Step Three – Decide on Your Needs and Wants

Your next step is to list your specific needs and wants in your new home. This step will be much easier if you’ve already prequalified for your loan. At this stage you can confidently determine the location you want to live in, space requirements, and any amenities you will want. You’ll know what price range you can reasonably expect to start your search in and just how much of your dream home you may realistically be able to find within your set parameters. Taking this step will certainly help you to avoid disappointments on the road to home-ownership by keeping you within the acceptable limits in the entire process.

Step Four – Start Viewing Properties

If you’ve carefully made the previous three steps then the fun will start with step four. Actually going to different homes and walking through is the point that every home shopper looks forward to. It is at this point that you get the tactical experience that most people enjoy when they start to look at properties. From this step you’ll measure each home you look at against your list of expectations.

It is at this stage that you’ll discuss with your realtor the different parameters of the market in the particular area. Make sure that you ask about the average list price for similar properties in the same area, and how many days a home will stay on the market before it is sold. Your realtor should be able to provide you with all of the information you’ll need so that you can choose the right property to pursue.

There are many different steps that a future homeowner must make in order to find the ideal property for their investment. In addition to these four steps a potential owner will have to pursue financing, have inspections made and even more. Still, with the right professionals at your side to walk you through the entire process there is no reason why making a successful real estate purchase can’t be accomplished successfully.

How Technology Has Brought In A New Age Of Real Estate Investing

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Whether you’re buying a piece of property or you’re selling you’re probably thinking about the recent struggles that the real estate industry has faced in the last few years. With a bout of foreclosures, an ongoing recession, and a sudden downturn it is easy to understand why many may be facing their decisions with more than a little trepidation.

Still, there has been real evidence that the real estate market can and has proven to be profitable for both buyer and seller in many ways. One of the reasons for this is the new way to find, select, and purchase property. With the many different technological advancements now available, investing in real estate can be very rewarding.

Using Mobile Devices

Today, rather than looking at newspaper ads and real estate books people are now turning to their mobile devices to get needed information. People are using smartphones, tablets, and other portable devices to collect data needed in real time. Those who are buying properties can quickly gain access to homes for sale as soon as they hit the market and those selling properties can quickly collaborate and negotiate deals quickly and easily.

With apps readily available, contracts, bids, and other important documents can be transferred from person to person instantly allowing for deals to be made with increased efficiency. And now with the ability for E-signatures to be applied to any document deals can be made and sealed without having to deal with the logistics that were most common in the past.

Easier Search

In the past, searching for the right property was often the biggest challenge for home buyers. Searching the web and sifting the many real estate listings could be a time consuming venture. However, with the new technology available a potential home buyer can sift through the thousands of listings and narrow down the list based on their own specific parameters, speeding up the search for new homes exponentially.

Making your property search mobile has made finding the right location to invest in much more efficient than ever before. Rather than having to sift through tons of information and waiting for documentation to be delivered, reviewed, signed, and resent, decisions can be made at a moments notice. The information you receive from these mobile devices can be filtered based on a number of parameters that you the investor suggest; it could be your geographic location, price range, or even the individual qualifications of an expected agent.

In addition to all of this the information you glean can be delivered and communicated within seconds making it possible to find that right real estate investment property in record time.

The Virtual Tour

One new feature that technology has done for those who are looking to buy real estate is to provide the virtual tour. This feature is a means for a potential buyer to view a piece of property without having to be on site until they are ready to seriously consider its potential. It also helps agents and realtors to show a particular property to more potential buyers without expending the added effort to navigate the different logistics to get all parties together at any given time.

Accessibility

The fact of the matter is that most people already have access to this new technology. The challenge that they now face is learning how to take these advantages and use them to the best of their ability. With the ability to finalize transactions without a face-to-face interaction more deals can be completed much more efficiently.

The world of real estate has changed drastically over the years. The times of pouring through newspaper advertisements and searching the real estate listings to find the right property are gradually fading into the past. With modern technology at your fingertips finding the right piece of property to invest in is easier than ever. You will be able to save not only time and energy but by extension save money too in your quest to find the perfect home investment.

Today’s real estate industry has changed drastically over the years; with the nation recovering from the real estate crisis of the past consumers are now becoming much more wary of their investment decisions. They want to find, negotiate, and seal the deal with fewer hassles and pay less commissions at the same time. This means that a realtor will have to deliver on their promises much more thoroughly than ever before and with far less time to do it in. This could be next to impossible if it weren’t for the advancements of modern technology over the years to make the job that much easier.

Taking Practical Steps When Investing In Foreclosed Properties

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While everyone may have the idea of buying a dream home it is not always within reach. This is one of the reasons why many people choose to buy foreclosed properties. The idea is that they will find the perfect property at a discounted price and one can get into a property that they would otherwise not be able to afford.

This type of thinking is a common mistake that many people will make that can lead to some serious problems when buying foreclosed properties. The fact is that buying real estate that has been foreclosed on requires an investor to approach the transaction from a completely different angle.

It’s Not Always Easy

It’s true that you’re getting a great discount on the property you’re trying to invest in but the challenge that you may face is in finding the right location to choose. The effects of the past real estate crash has left some communities with as many as 80% of the homes foreclosed on. This floods the market with thousands upon thousands of choices so the buyer must sift through what seems to be an endless array of options that can tend to be overwhelming.

Before You Begin

Before you begin your search you should start by finding a good real estate broker to work with you. You’ll want the realtor you choose to be ready and willing to work with the financial institutions that holds the foreclosed properties on your behalf. You’ll also want to go to your own financial institution and get a pre-approval for your loan. While it is not necessary that you accomplish these two steps prior to your search, it can make a very difficult search much easier if they are done ahead of time.

Check Databases

Once you’ve taken care of the preliminaries it is time for you to begin your search. With such a large number of foreclosures on the market at any given time it will be necessary for you to filter the results and narrow down your choice of options.

There are several websites online that can automatically search through the available options and sift out possibilities that do not fit within your specified parameters. In addition to the many databases that you can choose from you can also check a number of other options to find the right investment opportunity.

It is always difficult to find and purchase the right piece of property to invest in. All of us are usually searching for something different and we each come to the table with different expectations. The entire process can be that much easier if it is approached with a very specific plan and goal in mind.

Unless you plan to pay for your real estate with cash it will be beneficial to have a strategy firmly set in place before you begin the process. It will take the edge off of many of the obstacles that you will meet all along the way. While investing in real estate may have its own hurdles having a plan will be the key to overcoming them to get into the right investment opportunity for you.

Recognizing The Differences In A Foreclosure And A Short Sale In Real Estate

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While many people may fully understand foreclose properties, the term “short sale” may catch them off guard. The fact is that both of these real estate investment opportunities can be the key to helping an individual get into the home of their dreams. Each comes with its own set of advantages and disadvantages that each investor must understand before they pursue their opportunities in order for their venture into real estate will pay off.

Aside from the fact that the lending institution initiates foreclosures after the property has been repossessed and the homeowner often initiates short sales there are some distinct qualities of each type of sale that a buyer must beware of. Both types of transactions can be made at below market rates but caution must be exercised for a number of reasons before you begin the process.

Often short sales are initiated when the homeowner finds that he is no longer able to maintain the mortgage payments and have fallen behind. If something is not done to bring the loan back into good standing the homeowner may be facing foreclosure in his future. This could damage his financial credit and his future in his home. For that reason many choose to exit their property through a short sale where they can resell the property at a lower price than they owe on it.

What a Buyer Should Know Before Buying a Foreclosure or Short Sale

Because these types of investments can prove to be both beneficial and detrimental there are some very specific steps that each investor should take into careful consideration. It is extremely important that you deal with a realtor that specializes in these types of investments. They will be able to guide you through all the steps needed to complete the deal and warn you of any potential pitfalls that may be coming your way.

Always consider the condition of the property. If you’re expecting to fix up a piece of real estate then you need to be aware of the fact that foreclosures will often come with an “as is” tag and there may be many hidden problems that you will not readily be able to see with the naked eye. Short sale properties are usually in a much better condition but may not be able to bring the lower price tag that comes with them.

What You Must Remember

Regardless of the professionals that you enlist to aid you through your investment decisions it is extremely important that you do some of the research and legwork yourself. Always remember the warning, ‘let the buyer beware’ when dealing with purchasing used property. Investing in real estate is most likely going to be one of the most expensive ventures that you will have throughout your life.

In addition to understanding market prices you’ll also need to find out as much as you can about the condition of the property and any possible liens and back taxes that may be owed. When you’re ready to invest in real estate of this type it pays to take the approach slowly and methodically making sure that every detail is completed thoroughly at each phase of the sale. If you can manage each step carefully, there is no reason why you won’t be able to find your dream home at an extremely affordable price.

Basic Loan Structures For Real Estate Investments

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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.