| With the current state of the real estate and financial | | | | approval letter from the foreclosing lender in the |
| markets, it seems everyone thinks there is a great | | | | amount that you wish, or at all. |
| opportunity in the foreclosure market. Let me set this | | | | You can also work on lining up a buyer for the house |
| straight - There is, IF you do it correctly! | | | | while you or your negotiation company is negotiating |
| Buying foreclosed homes can be an incredible way to | | | | the short sale. You can then do what's called a |
| "buy low, sell high(er), but there are also several pitfalls | | | | "Simultaneous Close", where you buy and resell the |
| that you can fall in to if you're not very careful. | | | | same day, virtually eliminating any risk, while capturing a |
| Buying at the foreclosure sale isn't necessarily the best | | | | profit. |
| way to go. There may be major problems with the | | | | When we use this method, everyone wins; the |
| property that you don't know about, since most people | | | | homeowner avoids foreclosure, which would stay on |
| who buy at auction never see the inside of the | | | | their credit report for 7-10 years. The foreclosing lender |
| property, especially if it's occupied. | | | | receives a decent portion of their money back, and |
| Additionally, there is cash required typically, or at least | | | | they don't have to own another house that sits vacant |
| within a few days of the winning bid. This can be | | | | on the market for sale. The investor wins because |
| difficult for most would be investors, AND you're also | | | | they get to "buy low and sell high". The real estate |
| risking that capital on something that could potentially | | | | agents win because they get their commissions. See, |
| be very risky. | | | | this can be an excellent solution for everyone involved! |
| There is a better way. The Short Sale. | | | | One thing to be aware of are any tax consequences |
| When you buy directly from the homeowner via a | | | | or deficiency judgments that may arise for the |
| short sale, there are several huge benefits; You get to | | | | homeowner because of a short sale. Many time you |
| see the property, and even inspect it professionally if | | | | can get a deficiency judgment waived. Have them |
| you choose. You can insert specific clauses into your | | | | contact a tax professional if they receive a 1099. |
| purchase contract that give you an "out" if you decide | | | | Many times this can be mitigated if they can prove |
| not to move forward. Sometimes you may not get an | | | | they were in a hardship. |