Many of today’s investors are buying into the residential market. Why not? For buyers, the market has never been so favorable. Borrowing rates are remarkably low, housing prices are down and sellers take every offer seriously.
Foreclosure rates are up and short sales are a way of life. The Obama Administration is going so far as to encourage lenders and sellers to consider short sales. The National Association of Realtors (NAR) suggests that as much as 30 percent of current contracts are short sales.
There was a time when the short sale was an insulting occurrence. That is not the case today. The short sale is an accepted transaction under Obama’s Home Affordable Foreclosure Alternative Program.
The fact is that many of today’s buyers are under water. Their mortgages exceed the appraised value of their home. Selling by way of a short sale is not ideal and the seller’s credit rating will be affected, but under the Obama incentive plan, the short sale has many advantages over foreclosure.
Experienced investors have their short sale qualification packages in place. Early on in the real estate slump, short sales were nerve-wracking transactions that actually failed 40 – 50 percent of the time. Banks were simply not prepared to take the loss and closing a short sale was never a sure thing until the actual closing took place.
Inevitably, the delays caused buyers to cancel contracts. But, now banks are prepared and with cash incentives from the government to soften the loss, many lenders are now receptive to the short sale process.
The buyer needs to clearly state their qualifications. Presentations are made more to meet the bank’s short sale decision-making body than they are to convince the stressed seller.
Today’s realtors have been encouraged to take short sale education courses, sponsored by the NAR. These agents can not only help investors put short sales purchasing packages together, but can also walk the offers through the acceptance process. This does not imply that negotiations may not need to be involved, but at least the buyer will receive timely responses and closings can occur as scheduled. Use an agent to have the best chance to put a short sale together.