| Short sales are a great way to buy a cheap first | | | | said, you may still pay a lot for a property. It is |
| home or turn a profit with flipping, but are they right for | | | | important to look at the big picture. Consider the |
| everyone? Not always. Like any other money making | | | | home's appraised value. Say it is $450,000 and the |
| opportunity, the buying and reselling of short sale | | | | borrowers still owe $300,000, and you are able to |
| properties does have its pros and cons. So, what are | | | | purchase the property for $275,000. $275,000 is a lot |
| they? | | | | of money to pay for a home, but remember its |
| The Pros | | | | $450,000 value. Although you pay a lot, it is a great |
| You should get a good value for your money. Since | | | | value for the money. |
| short sales involve selling a property for less than the | | | | Short sales do take time. Mortgage lenders have the |
| outstanding amount due on the mortgage, there is the | | | | final say in short sale approval. Unfortunately, some |
| potential to get a good value for your money. In dire | | | | drag their feet. This is common when a property has |
| circumstances, the home's appraised value is not | | | | two mortgages and by two different lenders. Both |
| considered, just the amount the lender will lose through | | | | must agree to a short sale. The longest decision will be |
| foreclosure. | | | | from the second mortgage company, as they are |
| Can be less intimidating. If you want to buy an | | | | shorted. Some short sale buyers have waited as long |
| affordable property or a property to flip, your two | | | | as six months to receive a response. If you cannot or |
| cheapest options are foreclosures and short sales. | | | | do not want to wait that long, apply pressure after a |
| Unfortunately, if you are new to the business, | | | | few weeks or month. State you are interested in the |
| foreclosures can be intimidating. This is particularly true | | | | property, but losing interest. Request a decision in two |
| with foreclosure auctions. They are often jam packed | | | | weeks or else withdraw your purchase offer. |
| full of professional investors and the auctions move at | | | | The short sale deal can fall apart. As with other real |
| a fast pace. On the other hand, short sales involve | | | | estate sales, the deal can fall apart. This is why most |
| dealing directly with a mortgage lender, real estate | | | | lenders take their time accepting an offer. They |
| agent, or both. | | | | review the home's appraised value and estimate how |
| You can turn a profit. The best chance of profiting | | | | much they can get from a lender owned home or a |
| from short sales is with flipping. You buy a property, | | | | foreclosure auction. Borrowers also have up to the |
| make improvements, and resell for a profit. To make a | | | | final closing stages to make good on their outstanding |
| profit, you need to spend a little as possible. | | | | mortgage. So, if a lender receives a better offer or if |
| The Cons | | | | the borrower comes into the money, the deal can fall |
| You may not get the best price. As previously stated, | | | | apart at the last minute. |
| short sales are a good value for the money. With that | | | | |