Just starting to look at the potential of short sale opportunities. 1 question is whether or not the owner needs to be upside down on their property. Any advice or tips are greatly appreciated
yeah, that’s what a short sale is by definition. when the home owner owes more on their property than what its FMV is.
The homeowner doesn’t necessarily need to be upside down on their mortgage but they do need to be in a situation where they need to get rid of their home quickly for a number of reasons. Even if there is some equity in the house most banks will usually look at the short sale still. It just depends on how good of a case you make that the only way to go is to do a short sale. So don’t only look at houses that are upside down (even though most cases this will be the case), just my two cents worth…
If you find a house in today’s market that is a little below market value from a loan standpoint call me so I can save you time with the short sale… Thats a gold mine sub 2 deal.
Michael what is your contact number?, i would like to learn how to handle those that owe more than the home value. right now i target those that have equity. not sure why , i was just told to do it that way.
monique in texas
IMO, it all depends on your exit strategy. Properties with equity are great if you have an exit strategy. Properties that are “upside down” are great if you have an exit strategy. With that, you also have to have an acquisition strategy.
As Jake Rodgers notes, a property that has more debt on it than the current market value is a classic short sale. You negotiate with the lenders to discount the mortgages and acquire the property. Then you must have an exit strategy. Are you going to pay cash, or get a mortgage, or use transitional funds? Are you going to hold the property or are you going to wholesale it out for a quick buck, or are you going to put some money into it and fix it up and sell it retail for a larger profit?
Michael Quarles speaks of a good strategy in acquiring the property “subject to” the existing mortgage. Although, I like this strategy personally when there is equity in the property.
The bottom line is you need to find a buyer that “NEEDS” to sell a property, not wants to. If you can find a buyer that needs to sell a property, there are several ways to acquire it and several exit strategies to get paid as well.
Hope that helps.
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Michael what is your number?
Is Sub 2 dead… How many people would pay 100% value for a house that has a loan in place? Certainly it would be better to buy equity however that is harder to find… So dont pass up the sub 2 deals when searching for short sales…
Buying fully or near 100% leveraged Sub 2 means that you’ll either have inventory for when the market turns or a bunch notes paying every month… Either one works…