DEAN GRAZIOSI: DEAN GRAZIOSI REVIEW – REAL ESTATE FEED BY DEAN GRAZIOSI

In case you missed it, we are in the midst of a protracted short sale buyer’s market.  The end is not in sight and from the lender’s side; the situation could get worse long before it gets better. 

Investor’s quickly realize that each short sale is different. Lenders have different policies for short sales.  While there are now government initiatives to aid both the seller and the lender, some lenders have a difficult time accepting short sales.  Like it or not, the value of residential real estate has declined significantly in the past two years.

Lenders can point at appraisers or even their own credit departments, but in 2007 very few Americans foresaw the fact that 14.6 million people would be out of work by 2010.  Lenders also have difficulty admitting that their lax credit policies including low doc loans and zero down payments have put them in this position.

Well, it has happened and 33 percent of all transactions involve distressed housing.  In fact the investor’s short sale offer may seem like a slap in the face to the lender but that offer may be the best price they will see.  Basically, the short sale offer is the bird-in-hand theory and it should be presented as such.

By accepting the bird-in-hand short sale offer, the lender avoids taking title and being responsible for maintenance, homeowner association dues and taxes.

However, to present the bird-in-hand rescue plan, the investor must do his part.  Make sure you have all the cash you will need to cover the down payment, various inspectors, closing costs and escrow in addition to the funds needed to restore the property.  Do not expect the existing lender to help with this transaction.  They simply want out.

Before the investor starts looking, make sure a pre-approval letter for financing is in place and that it has at least a six-month commitment.  Armed with that letter and all the cash you will need you are ready to go out and invest in a short sale.  The seller and the lender will not share your enthusiasm, but remember, you are their bird-in-hand and if they do not like it, there are other lenders and sellers who will.    

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This entry was posted on Wednesday, August 4th, 2010 at 4:46 pm and is filed under Investors, Short Sale. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.