Homeowners that are facing foreclosure only have a few options to choose from and most aren't very pretty.
1. Attempt a loan modification
2. Try to sell the property the conventional way
3. Deed in lieu of (signing the property back over to the bank)
4. Short Sale
5. Bankruptcy
Yes, I'm an investor and will say #4 is the way to go and not only because I have the experience buying properties in this way, but also because it's the best option for a seller facing a huge debt that is way behind.
I can say that in my experience loan modification approvals rarely result in what homeowners really need. The decrease in their monthly payment isn't nearly significant enough enabling them to stay in the home. A deed in lieu is just a friendly foreclosure and doesn't bode well for the homeowner when they need their credit again in the future. Landlords also hate to see foreclosures on a potential tenant's credit. Attempting to sell the property conventionally is very tough in today's market. There is stiff competition to sell as it is and trying to cover all that is owed on the property plus closing costs and potential realtor commissions (if listing) is usually unrealistic. Lastly, bankruptcy is what people really want to steer clear of as it takes so long to rebuild your credit.
A short sale, however, is an effort on the homeowner's part to try and proactively settle the debt. When an investor is trying to purchase the property with cash it's a win for all parties involved. The seller is able to avoid foreclosure, the lender gets most of the debt that is owed and works with a motivated cash buyer (avoiding waiting on the market for a buyer) and the buyer (me) purchases a property for a great discount with potential profit down the road.
It doesn't cost the homeowner any money to attempt a short sale, except a little time and effort in gathering the proper documentation the lender requires. In addition, as an investor when I buy a property through a short sale, I cover all closing costs, so a homeowner is not asked to come out of pocket any money whatsoever.
When an individual or family buys a home, they don't foresee that they will ever face a situation where they have to move due to financial hardships. It's a tough reality to face and can be very overwhelming. However, a short sale does show a proactive attempt by the homeowner to do something rather than just abandoning the property or waiting for the ultimate foreclosure to occur. Lenders will accept short sales on properties; it's just a matter of reaching an agreement on the purchase price.
There are plenty of steps to complete when it comes to getting a short sale closed. I have had plenty of years and hundreds of deals of experience to tell you that it is a successful way to buy investment property and I would highly recommend learning more about this process if you have any interest in real estate investing.
Start by getting a copy of my new book, "How To Make Money In Your Local Real Estate Market."
Go to: http://www.BrianEvansBooks.com
1. Attempt a loan modification
2. Try to sell the property the conventional way
3. Deed in lieu of (signing the property back over to the bank)
4. Short Sale
5. Bankruptcy
Yes, I'm an investor and will say #4 is the way to go and not only because I have the experience buying properties in this way, but also because it's the best option for a seller facing a huge debt that is way behind.
I can say that in my experience loan modification approvals rarely result in what homeowners really need. The decrease in their monthly payment isn't nearly significant enough enabling them to stay in the home. A deed in lieu is just a friendly foreclosure and doesn't bode well for the homeowner when they need their credit again in the future. Landlords also hate to see foreclosures on a potential tenant's credit. Attempting to sell the property conventionally is very tough in today's market. There is stiff competition to sell as it is and trying to cover all that is owed on the property plus closing costs and potential realtor commissions (if listing) is usually unrealistic. Lastly, bankruptcy is what people really want to steer clear of as it takes so long to rebuild your credit.
A short sale, however, is an effort on the homeowner's part to try and proactively settle the debt. When an investor is trying to purchase the property with cash it's a win for all parties involved. The seller is able to avoid foreclosure, the lender gets most of the debt that is owed and works with a motivated cash buyer (avoiding waiting on the market for a buyer) and the buyer (me) purchases a property for a great discount with potential profit down the road.
It doesn't cost the homeowner any money to attempt a short sale, except a little time and effort in gathering the proper documentation the lender requires. In addition, as an investor when I buy a property through a short sale, I cover all closing costs, so a homeowner is not asked to come out of pocket any money whatsoever.
When an individual or family buys a home, they don't foresee that they will ever face a situation where they have to move due to financial hardships. It's a tough reality to face and can be very overwhelming. However, a short sale does show a proactive attempt by the homeowner to do something rather than just abandoning the property or waiting for the ultimate foreclosure to occur. Lenders will accept short sales on properties; it's just a matter of reaching an agreement on the purchase price.
There are plenty of steps to complete when it comes to getting a short sale closed. I have had plenty of years and hundreds of deals of experience to tell you that it is a successful way to buy investment property and I would highly recommend learning more about this process if you have any interest in real estate investing.
Start by getting a copy of my new book, "How To Make Money In Your Local Real Estate Market."
Go to: http://www.BrianEvansBooks.com
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