Real estate investing is a great way to start a side-hustle or to get out of your unfulfilling 9-5. There are many ways to get started, but if you are looking to get a quality property at a reduced price, buying short sale properties and real estate short sale properties might be the right option for you. In this article, we will cover what you need to know about buying short sale properties and real estate short sale properties to get started on your investing journey.
What is a short sale?
A short sale is one way to obtain a property for a reduced price. The lender agrees to sell the property for less than what the owner owes on the mortgage in order to get the property sold and get some of their investment back. This happens when the homeowner has negative equity on the home, meaning the value has declined. The difference of what is still owed on the loan is forgiven.
Requirements for a short sale
- The lender is taking a loss with a short sale, so they must agree to it. It may be in their best interest since a short sale is better than a foreclosure, but it is up to them to analyze their options and decide whether to agree. The seller must show hardship and proof that they cannot keep making mortgage payments.
- Although you are purchasing the property for a reduced price, the home still must sell for around market value.
- If a property is a short sale, it must be disclosed. Buyers need to be made aware that there are potential damages and necessary repairs with the home. They also will need to know that on top of negotiating with the seller, their lender will be involved.
How to buy a short sale
Now that you have a basic understanding of buying short sale properties and real estate short sale properties, it’s time to learn the steps you will take to purchase one.
- Seek out potential short sales: This can be through searching online, through courthouse listings, or a real estate agent.
- Do your homework: You will want to consider how much is owed on the home compared to its value. If the homeowner has high equity, it might not be a great grab. It’s in your best interest to go after homes that are having trouble selling at a price to satisfy the loan.
- Visit the property: This is when you will determine how much you will spend on repairs and renovations. Depending on your budget, you might decide that it’s the perfect fixer-upper for you or that it’s better to pass.
- Get your financing together: Establish who will finance your deal and how. Short sales move fast, so get your pre-approval ready to go if you will be working with a lender.
- Contact short sale lender: Whether it be you or your real estate agent, you need to touch base with the short sale lender. You may have to fill out documentation to them, but at the very least, know who will be making the decisions regarding this sale.
- Negotiate and close: You may have to submit an offer or two before the lender finally agrees. As with any real estate transaction, negotiate, but know your limits and know when to walk away. Once you’ve sealed the deal, you’re ready to move to close.
Intro to Real Estate
If you are interested in buying short sale properties and real estate short sale properties but don’t know where to start, we get it. That’s why we have created real estate education courses to teach people the ins and outs of real estate investing. The courses are designed to meet all levels and learning styles and use real life investing scenarios so our students are ready for the real thing. We are passionate about sharing what we know because we have experienced firsthand the benefits of real estate investing.
If you are ready to take the leap into real estate investing, our team of experts can help. Contact us today, and we can help you on your way out of your 9-5 and onto financial freedom.