Real Estate Short Sale Investing

Real Estate Short Sale’s have played a big part in the real estate market over the last 2 years. The latest statistic has put 1 in 3 real estate transactions as a short sale (s.s.) or foreclosure/REO.

A s.s. is defined by the bank/lender accepting less than what the homeowner owe’s on their mortgage.

The economic crisis and the mortgage fallout have forced many homeowner’s to either walk away from their homes or attempt to do a s.s.

A bank/lender will not consider a property for a s.s. until the homeowner is at least 1 mortgage payment behind.

Short SalesThe banks have finally realized within the last 6-9 months that the s.s. process is much less expensive. On the average the banks will save about 30% in value of the property by allowing the homeowner to s.s. as opposed to letting the property fall into foreclosure (if a bank forecloses, they will typically have to hold the property for approximately 6 months. Then pay sales costs and more than likely put out more money for minor repairs).

A s.s. typically can take 2-6 months to complete. And that’s if it is being handled by an experienced s.s. negotiator. There are times that it can take even longer. However, the banks have become more efficient due to the volume and capacity that they have been forced to handle.

Short sales have become a great way for investors to make money. If the investor has the right negotiator on their team, equity can be created by proving that the property is worth less than market value. This is done by devaluing the property due to distressed conditions. Again, with the right negotiations, the investor can get the bank to accept less, then turn around and either do a quick sale (flip) for a quick profit or complete the repairs themselves and put the property back on the market for resale for profit.

Short sale have given the investors a great opportunity to get the property values back up as well as make a few bucks for their time, patients and efforts. I don’t see the short sale going away anytime soon and as long as there around, the investor will be playing a vital roll in this market. All state’s have different laws pertaining to s.s. Make sure that you check with a qualified real estate attorney before attempting to make an investment.

This is Tim Erno. I am an active real estate investor / entrepreneur. If you are looking for opportunities to make money, then go visit my site at This is the entrepreneurs dream. Keep an eye out for more articles on real estate investing and money making ideas.

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