Short-sales houses have become the order of the day. Investors have been taking advantage of them for a while (actually since before the economy tanked in the late 90’s) and now thanks to the Obama administration and the banks, the opportunity to make millions of dollars by wholesaling short sales has never been better.
There are a few key mistakes that real estate investors make when wholesaling short sales. If you’re unable to avoid these mistakes, then you’re probably going to find yourself in hot water at one point during your career.
First Mistake
First, not knowing how to get the bank to accept your price. This can put you in the hole a lot faster than you may realize. As an investor, you’re most likely not buying this property at an award-winning discount. You’re buying it at a deeply discounted price because the bank wants to get rid of it fast. There’s really no reason for anyone to stand in the way because the homeowners are walking.
If you are attempting to wholesale short sales the quickest speed you’re going to need to get is the bank. Getting the bank to just sell you the house means you get the house under what is known as short sale approval. It’s similar to when your seller gives you a contract on a home to flip and you have to go get a lender to accept it. All you have to do is get them to take it and you’re there.
Problem With Investors
The problem with investors wholesaling short sales is that they think they are the ones with the deal on offer. They think they are offering a secret that they aren’t sharing with anyone else.
The problem with this is that by the time you wholesale it to a retail investor, you have to rely on the point person on your title team to prepare the package and get it to the bank when it’s ready. It doesn’t matter if that person is your brother, cousin or best friend. If they don’t know how to prepare the package, or if they can’t find anyone to say “yes”, they are going to be unable to make it.
The short sale process is probably the most time-consuming of all real estate investing, and since time is money you’re looking at the shortest timeline possible to get the deal done. Even though the time it takes to get the short sale package to the bank you can parallel shop, which can expedite the process as they know their time frame and what the bank will take.
I’m not saying it’s a bad deal, just grasp a grasp on what you’re doing. As an investor that does a lot of short sales, it’s a lam indication that you have universal buying and selling skills. If you understand how to motivate the bank to take you seriously, you’ll be the one the others are looking out for.
Second Mistake
A second crucial mistake is to simply offer too little. The definition of a short sale is a homeowner who owes more on the mortgage than what the house will sell for. You’re offering somewhere in the neighborhood of 35%-40% less than the owner owes on the loan. You can’t get a bank to accept a short sale unless you offer them enough to cover their loss.
If they were to accept your short sale you’re still offering a potential buyer a a few thousand dollars below the market value of the house. You just set the bar so low that no other real estate investor is going to want to step below you.
Bank short sales are some of the most profitable real estate investing opportunities out there. Learn the ropes fast and you can be flipping homes in no time.
If you have been wholesaling short sales, then you know how difficult they can be. There are many reasons why people sell short, including not having enough money to pay their bills, not being able to find buyers, or simply not wanting to deal with the hassle of selling. If you are going to wholesale short sales, make sure that you only do business with companies that are ready to buy right away.
Wholesaling short sales can be stressful, but it shouldn’t take over your entire life. Try to stay positive and focused on the future instead of dwelling on the past.
Closing House Tips
We buy houses Durham NC and all surrounding areas in North Carolina. If you need to sell your house fast Durham, connect with us… we’d love to make you a fair no-obligation no-hassle offer. Take it or leave it. You’ve got nothing to lose
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