Is A Short Sale A Waste Of Time In Real Estate Investing?

A short sale is the process of negotiating for a discount on the mortgage with a mortgage lender. In other words, the lender accepts less that is owed on the mortgage and lets you buy a property at a discount.

A loan qualifies for a short sale is the home owner is at least two payments behind.

You as the real estate investor identifies motivated sellers who qualify for a short sale and you negotiate with lenders.
Here are importand factors to consider before doing short sales.

1) Pre-screen your properties properly
Not all properties qualify for a short sale. Selecting the wrong properties for short sale will be a waste of your time.

A home owner must be behind on their mortgage at least two months. The mortgage balance is an important factor to consider. A property with only one mortgage needs to be profitable if you get only 10-20% discount.

If there are two or more mortgages, negotiating all of them can produce a lot of profits. You can get as much as 80-90% discount on a second mortgage.

Properties with more than one mortgage are likely to be your best candidates for short sale.

Of course if repairs are needed, you must factor all the costs.

2) Be prepared to wait
A short sale can take 3-6 months, sometimes more. If you are a new real estate investor, you must take into account this time factor before adopting short sales as a full-time business model.

You must have enough money to cushion you during the long waiting periods. . Otherwise adopt short sales as a part-time model in your reale state investing business.

3) Be prepared for rejection
Your short sale application can be rejected for any reason. They can reject it even when it looks good. Be prepared for rejection.

Obviously, having several short sales at a time helps. Expect a 60-70% success rate if your candidates are selected well.

4) Time is of the essence
If a property is about to go into foreclosure auction, you might not have enough time to stop foreclosure. . Choose properties that will allow you time to negotiate.

5) Have an acceptable exit strategy
Some transations are not acceptable to lenders for short sales. For instance, lenders will not accept wholesale dels with "and or assigns".

You must close as soon as your short sale is approved. Most banks will give you about 30 days.

6) Enjoy some big profits
Some properties will produce big pay days for you. As long as you can qualify them properly it can be a source of big profits for you.

Article Source: http://casinoarticles.us

Simon Macharia is a real estate investor in Dallas, Texas. He has done a lot of short sales among other transactions. His business is run and automated by real estate investor website from www.realestateinvestorswebsites.net

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