Is it still a good time to make money in real estate? Of course nobody knows what the future has in store. But owning rental real estate might still fit in nicely as a long-term investment for you.
One of the most sought after ways to buy real estate is through a short sale. Despite recent increases in real estate prices, you still might be able to jump on a good opportunity. And now it’s easier to take advantage of this if you do find a diamond in the rough. New rules make it possible for owners to market their property as a short sale before they enter the foreclosure process. Until recently, homes could only be sold after they entered foreclosure This equals opportunity for investors.
What is a short sale?
A short sale is when a property owner sells the real estate for less than he or she owes on it. That often means that the property in question is a huge bargain and opportunity – if you can snag it before anybody else does. I’ll show you how you might be able to do that in a minute.
Short sales can only be done if the mortgage holder (the bank) agrees to take a loss on the mortgage they gave to the owner. Lenders don’t like losing money very much but many realize that a short sale may be preferable to taking back the property. If you uncover a situation like this, you can really cash in.
While this process used to take a long time to complete, it is far easier to get a short sale package approved relatively quickly. Last, short sales can now take place before the property is in foreclosure as I said before. This means more properties have now become short sale candidates. Yummy.
The New Problem
Even though more properties can be purchased via short sale, there are now a great deal more people vying for these deals. More and more people are convinced that now is the time to buy property. It’s hard to find short sale opportunities.
According to the Investor’s Business Daily, there are a variety of websites that might help you overcome this problem. They are:
While these sites might be helpful, remember that the entire world has access to the information on these sites. If you live in an area with keen competition, you don’t have much chance of snatching up realty bargains using these sites.
If you want to buy short sale real estate, your best bet is to find a great realtor who specializes in this type of transaction. Keep in mind that most every real estate sales person is going to try to convince you that they specialize in short sales. They are starved for business. Your job is to separate the wheat from the chaff so you don’t waste time with real estate agents who can’t deliver the goods.
How to Find the Right Agent
Let me tell you how to find the right broker by sharing a little story. We bought our current home in the 90s (not via short sale). At the time I was using a broker who was really a nice man…but a horrible broker. This was at a time when real estate was really hot and it was tough to find a home we wanted to buy. And my broker wasn’t doing anything to help us. I was the one who found about new homes being offered and I had to prod him to get off the couch to learn more.
When I realized that this guy was more interested in watching Oprah than in helping me, I fired him. So my first suggestion is not to work with a broker who is a friend or because they are “nice”. This is a business transaction and you want to work with someone who is willing to earn their keep.
Ask your broker what she specializes in. If she tells you that she is in expert in the short sale department (they all think they are) ask her:
- How do you get your listings?
- Which banks do you work with? Can you provide references from these banks? Does the bank only work with you on the property they want sold?
- How do you identify distressed homes for sale?
- Do you canvas the area and knock on doors looking for potential leads?
- Do you send out mailings in your target neighborhoods looking for listings?
- Do you scour the MLS listings daily for short sale offers?
- Do you buy a mailing list of people who are late on their mortgage payments and contact them?
- When was the last time you did a short sale? When was the time before that? How long did those deals take to close? What was the benefit to the buyer?
These are all legitimate questions you should ask. Once you speak with 5 or 6 brokers, you’ll get a clear sense of who you want to work with.
Buying short sales is hard work. But you can outsource some of that drudgery by hiring the right real estate brokers who specialize in this field. It’s well worth the effort to find great people for your team before you take the field.
Are you buying short sales? How are you finding the deals? Do you use a broker? How did you find her?