7 Ways to Earn Buying a Short Sale
Real estate is an evolving industry and offers a number of options to make huge profits. Investing in a short sale home for is a lucrative option for the investors. They purchase short sale home to earn bigger profits after making cosmetic changes. They try finding home owners that are facing foreclosure and motivate them to sell the property under the short sale. The short sale process may take up to three to six months to close. Meanwhile, negotiations are being conducted, and investors find a buyer for the spotted property. The profit is made from the difference between what price the investor has negotiated with the bank, and what he sold it for the end user. There are no limits on the profit margin, and investors make huge profit arranging this type of transaction.
Buying a Short Sale to Flip:
FHA short sale program forebodes the sale of any property that you buy as a short sale before ninety days. Even in the traditional short sale, the bank might ask you to sign a restraining agreement that will bind you not to sell the property immediately. Therefore, if you plan to flip a home, plan on holding it for a while.
Preapproved HAFA short sale
A preapproved HAFA short sale means that a bank has already established the price for that property. Some of the banks’ higher short sale agent to produce a fast and cheap appraisal called BPO and short sale on the opinion of hired short sale agent. In this case, banks don’t bother to ask the listing agent for an opinion or value. Because of this practice, it is not unusual for a Preapproved HAFA short sale to be listed under market value.
Short Sale with Long Days on Market
The major intention of investing in short a sale is to buy low and sell high. So, many investors try to pay as low as possible for the spotted property. In many towns, short sale prices are all over the map Most of the time bank just wants to see the buyer walk away. The bank might be willing more to deal if the home has been on the market for a long time.
Buy a Short Sale Fixer Home
Mostly short sales are sold in an “as is” condition. It means that a bank will not make any changes, but also will not authorize to make the repairs. There are lesser chances that the bank sends a contractor to inspect the property instead relies on the report provided by the BPO’s agent. BPO agents are not general contractors. The BPO might greatly exaggerate the amount of money it will take to fix up the home.
Repair Bids along Short Sale Offer
If the home needs some repairs, bank will want to see that what’s wrong with the property and will cost it to fix, even though it won’t allow repairs. Most of the home often needs some repairs, and bank will add this cost to value the property. The bank will choose the lowest bid, so make sure the lowest bid is a bid from which you can make money on the short sale.
Show the Home for Rent Upon Short Sale Approval.
Because the seller has the ownership not the bank, you may need to get written permission to show the home for rent after the approval of short sale from the bank. That way, a tenant could be ready to move into the home on the day it closes. Remember, rent is paid in advance. Your first mortgage payment won’t be due for at least 30 days or more.
Making Cosmetic Changes
Some investors after buying a short sale home make cosmetic changes and sell on a higher price. The cost incurred to make the house look more attractive and beautiful is much lesser than the profit earned. The profit margin may depend on the condition of the house. If the house only needs some cosmetic changes, then there are bigger chances to gain more profit, but if the homes require some structural changes, then it will cause a huge expense to an investor. Make sure to inspect the home properly before making an investment decision.