With the economy currently in “lock down” mode following 2008’s wild ride, primers for sale it’s prime time for home buyers and real estate investors to take another gander at the real estate market. Deals are waiting to be had, and there are two key areas that shouldn’t be ignored: short sales and REO properties.
A quick primer on the terms short sale, foreclosure and REO.
Short Sale – A short sale is a property that is in default or foreclosure that is put up for sale with the lender’s permission. The lender, by permitting a short sale, is agreeing to accept less than is owed on the property. Lenders agree to short sales in order to avoid the foreclosure process and the expenses the process incurs.
Foreclosure – A term used in may ways, but technically a home in default to the lender where the lender has initiated foreclosure proceedings. A home remains in foreclosure until it sells via short sale, dried sea cucumber for sale surrendered via deed in lieu or the foreclosure process is legally completed and the property becomes and REO property.
REO – These are properties that have gone all the way through the legal foreclosure process and are owned by the bank. The acronym stands for Real Estate Owned.
If you’ve been considering buying your first home, buying a new home or looking to add a holding to your existing real estate investment portfolio, short sales and REO properties should definitely be on your list for further examination. Here are five excellent reasons to broaden your horizons and work with your real estate professional to explore both short sales and REO properties:
- Inventory is plentiful – Banks have an excessive amount of REO inventory on the books and quite simply, they want to sell it. This makes the market very buyer-friendly and places you in a position to acquire a property at below-market value.
- Rental Rates vs. Mortgage Payments – The correction in housing prices have brought mortgage payments much more in-line with rental rates in many areas. For the home buyer and real estate investor, this presents a very favorable scenario as cash flow is more likely today and tomorrow. A great time to buy a rental property in the right area.(Be sure to check vacancy rates, adderall for sale crime stats, etc.)
- Time is if the essence – When looking at properties that are short sales, there is a definite time constraint with the seller, imposed by the bank. You and your agent/broker may find that you stand an excellent chance of picking up a property in short sale when it’s close to the bank’s deadline. Have your agent/broker do some legwork and call the lender to get the scoop.
- Specialization – With the increase in short sales and REO properties on the market due to the economy, there are many real estate professionals who specialize in these areas. If you’re going the route of bidding on a short sale or REO property, it’s extremely beneficial to have the assistance of a seasoned professional who has relationships with banks and is familiar with the bidding process. An unfamiliar agent/broker can end up wasting your time in the bidding process if they don’t understand the legwork involved in helping you submit a competitive quote. When you’re buying something as substantial as real estate, this increase in specialization is an added benefit for every buyer.
- Find your niche – Believe it or not, there are many buyer and agents/brokers alike who won’t deal or even look at short sales and REO properties. This means that as an educated buyer working with a savvy professional, you’re narrowing the pool of bidders for your dream home. Do your homework, understand the bidding process and establish your boundaries for a successful bidding process. Teaming with a real estate professional who specializes can only improve your short sale and REO buying experience.
Erika D. Napoletano is the Director of Communications & Content for InvestorLoft.com. As a former holder of multiple FINRA/SEC licenses such as the Series 7, 66 and 31 as well as being a former Registered Mortgage Agent, she possesses a deep knowledge of both investments and real estate. InvestorLoft.com ([http://www.investorloft.com]) is dedicated to providing the most relevant search results for the real estate investor on the web and offers the most comprehensive tool set available today. From smart, investment-centric property searches (search InvestorLoft listings by cap rate, cash flow, cash on cash return, down payment ad more) to the most in-depth, real-time financial calculators available online, InvestorLoft is committed to meeting the needs of the real estate investment community as well as the real estate professional.
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