How To Locate Profitable Short Sale Deals For Real Estate Investing

Negotiating with banks to sell you properties for less than is owed can make you big bucks. Some short sales can make you money, others have little potential for profit.

This article points out sources of the most profitable short sale deals.
Even though all short sales involve negotiating for a discount, some of them are a pure waste of time
As a real estate investor, you should aim for those deals that will make you more money.

1) Work directly with motivated sellers
The best properties for real estate investing come from motivated sellers.
This is before the property gets foreclosed.

To qualify for a short sale, the motivated seller must be at least 2 payments behind on their mortgage.

You can target these motivated sellers by targeting people in legal trouble who own real estate. These include people going through divorce, burned landlords, people with liens, people who have inherited properties, vacant houses, expired listings etc.

These people probably have properties they would like t sell, even though they are not listed on the market.

2) Target properties that allow you enough time
In some states like Texas, when a foreclosure is files by the lender, it is usually foreclosed within 3 weeks. In other states you may have several months before foreclosure happens.

Ensure there is enough time before foreclosure happens. It can take weeks to months just to get the bank's attention.

3) Target short sales with more than one mortgage

The holder of a second mortgage can lose 100% of their investment in foreclosure. They therefore typically offer bigger discounts.

It is not unusual to get 80-90% discount on the second mortgage. If you get 10-20% discount on the first mortgage, you can create some good profit out of it.

4) Avoid short sales listed in the MLS
Real estate agents approach banks and list deals as short sales. They are open to any offer they can get, of course the higher the better for them.

Real estate agents will not tell you the mortgage balance. And of course you will never know if there is one or two mortgages.

This means your offers will be blind. You cannot make good offers as a real estate investor if you do not know the mortgage balance.

Sometimes you might a good deal from listed short sales, but mostly you will offer too much or too little. And most of your offers will be rejected, wasting too much of your time.

Stick to motivated sellers and you will find short sales deals that will make you some good money.

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