Why Invest In Short Sales

Helping investors in Southfield, Birmingham, Lathrup Village, Beverly Hills, and other cities in Michigan to invest in Short Sales and explain to them not only the qualifications, but also the benefit on doing so, Monoply Man standing graphic

 

 

 

 

 

 

 

 

Do you want to talk to an experienced agent about why you should invest in Short Sales? Give the Calhoun Team Realty a call (248) 905-1402 and we can assist you today!

As it was mentioned in the prior article “What is a Short Sale?”, a Short Sale takes time, but if you are willing to wait, then investing in short sales is a great idea.

When investing in short sales, you are often listing a low price of the property. You can make a 10-30% on short sales and a fair chance on making a profit.  It really determines on the actual property itself. Good research is needed when investing in short sell as well. Key points to consider in your research in a good investment:

  • The property condition
  • The property location
  • The neighborhood

Halt! Did You Know?

When buying a short sale, the price is based off what the property is worth now. Not what is was worth when the previous owner had taken out a loan.

 

The Pros & Cons in Short Sales

If you are still interested in doing short sales, here’s the pros and cons you need to consider first:

PROS

  • Avoid Foreclosure – Nobody likes foreclosures; not only does it gives a great impact towards your credit but also the process can take six months to a year to complete.
  • You’re in Charge Sure when you’re going against a foreclosure you are somewhat in control, but doing a short sale will give you the power to negotiate with the lender and find a good buyer. This will help your credit avoid getting hurt from a foreclosure.
  • Less is Better It’s better to have less damage towards your credit because you and your family can quickly recover and will be able to buy another property rather than settling for a foreclosure.
  • The Lender’s Forgiveness – The lender might forgive you for the difference between the final price and the remainder of debt you still owe.
  • Free from Mortgage –You will be free from paying a large amount of monthly payments for your mortgage.
  • New Mortgage –It will take a lot for you to be able to qualify for another mortgage rather than settling for a foreclosure.
  • Best Route to Take –If you can’t pay your mortgage or you and the lender aren’t agreeing to decrease the amount of your monthly payments, then a short sale would be your best option (Note you will lose your property and investment).

 

CONS

  • Credit Loss – You will still lose credit, but not as much if you settle for a foreclosure. Even though lenders will see a short sale somewhat like a foreclosure, the chances on obtaining another loan will be small during the waiting process.
  • Tax Consequences – A form will be sent to the IRS if the lender forgives the remainder of your debt from the short sale. The IRS will use the forgiven debt that you will have to pay through taxes.
  • The Lender Will Be Watching You – The lender will make sure won’t have any appeal on any of your assets to return the remainder of your debt.
  • A Legitimate Reason – In order to have a short sale you must be going through one of the following hardships:

Unemployment

Relocation

Illness of borrower or co-borrower

Loss of income

Divorced

Death of a co-borrower that qualified the loan

Neglect the local market property value

Military Duty

Payment Increase on Adjustable Rate Mortgage

Medical Bills

Medical condition of spouse or co-borrower

Family Emergency

Damage to Property (natural or unnatural)

(Note the lender will decide you if you gambled your money or you have poor management with your money)

 

  • The Lender Will Demand Loss Payment Always keep this in mind, the lender’s forgiveness is optional, and might want you to pay. There are two ways to handle this. You can negotiate an arrangement out the short sale or they decide to maintain the repayment and you could settle for a foreclosure. It is highly recommended to have an expert with a team that can help you in this type of situation. Give the Calhoun Team Realty (248) 905-1402 a call and we will be gladly to assist you in this situation.

 

  • Don’t Let the Title Fool You – A Short Sale isn’t really short at all, it’s a long process and really it determines how quickly you get the right papers in order, the way it’s given and how fast the lender will reply. This is common for some people, in a sense, creating a backlog throughout the process.

 

  • Lenders Will Take Their Time – Remember when I said short sales are optional for lenders? Well, they may accept, but they will take their time doing so. Unfortunately lenders are well-known for this.

 

  • Multi Mortgage If your property has a 2nd mortgages or any other liens, you have to discuss to each lender for an agreement, which will take a lot of time.

 

  • A Promissory Note In order for the short sale to go through the lender might make you sign a Promissory Note which is a document that contains a written promise to return the amount of the debt forgiveness to a specific agent or carrier at a specific date.

 

  • A Good Buyer is a Must Have – The lender would agree the short sale, as long as the transaction is determined by a good offer from a good buyer.

 

  • The Attack! After the short sale is complete the lender might come after you for a repayment for the forgiveness debt.

 

Still have questions about Short Sales? Call the Calhoun Team Realty (248) 905-1402 and we will answer any questions about Short Sales, Foreclosures, or anything that has to do with helping you Selling, Buying, and Managing your property.

 

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