Real estate investing is not just about buying and selling properties. It also involves understanding of the opportunities and better understanding of terms such as short sale, pre foreclosure, flipping, wholesaling and many more. The property has to be objectively appraised for the information of buyers, sellers and lenders. Real estate investing is an exciting business venture with the potential of high profits. 

Except for a state license, no other formal education or experience is required for real estate brokering. A personal qualification for real estate investor includes an outgoing disposition, tact, honesty, integrity, maturity, energy, optimism in face of turndowns and a good memory for business details and people. They should have the propensity to get along with all kinds of people. There is a huge inventory of defaulted properties repossessed by the banks in the market waiting to be resold. There are many opportunities for real estate investors who know properties in their area. There is huge turnover in the real estate markets especially during the economic flux. There are very few investors who truly know how to successfully negotiate a short sale.

Negotiating a Short Sale

An intelligent and perceptive business owner, no matter how small the business, sets the goals of his enterprise and mobilizes human and capital resources to meet them. He need not be school topper with fancy degrees to negotiate a short sale deal. All one needs is to understand people and art of communication. Not all short sale of pre-foreclosure properties result in profits. There are many rejections too. It is very important to know how to negotiate the short sale deal. It is a big money and a big risk business. A strategic plan is necessary to make the deal go your way by persuading the lender to agree with your offer. Many a times, banks may reject your short sale offer, without assigning specific reason for non-acceptance of your submission.

Tips For Success In short Sale Deals 

There are several steps that will ensure your success when negotiating with the lenders. It is a very big misconception that every homeowner facing foreclosure is a good candidate for short sale. It may not turn out to be a great deal as per your expectation. You have to first identify the foreclosure property very closely. Check all the documents, rehab requirements and the value of the property before taking it on.

Try to analyze the deal and develop an excellent plan or strategy to acquire it. You need to learn to differentiate between a good and a bad short sale deal. All the deals do not lead to good short sale opportunity. Moreover, it is important that you never take ‘no’ for an answer from the lender. ‘No’ is not the final chapter of your negotiation in a short sale deal.

Look For Answers 

If for any reason your short sale deal is rejected, you must seek the reason for rejection. Ask yourself why your submission was rejected. Why did they say no? Whom else can I approach in the same organization to know the reason? Was my offer too low? What was the BPO amount? What could be the minimum acceptable amount of the lender? What else can I do to turn around the negative verdict? Each time you are met with resistance from the lender regarding a short sale deal, ask these questions of yourself. Thereafter you should try to rectify all the weak points systematically before resubmitting your new short sale offer to the lender. If necessary, you should adjust your approach slightly to turn a ‘no’ into a ‘yes’. 

A Real Life Example 

A young real state entrepreneur Thomas Stockman, shares details of an awesome deal he closed recently. Thomas got a call from a gentleman who had two properties in foreclosure. Both the properties were on the same street and were bought as rental homes within the previous year. The same mortgage company financed both properties. One property had a mortgage balance of $150,000 and was in need of several thousand dollars worth of repairs. The other property had a mortgage balance of $156,000 and was currently being rented for $1,100 per month. Both the properties had very little equity spreads, but were located in an excellent neighborhood. After qualifying both properties, Thomas decided to attempt a short sale.

He contacted the bank and began the process of short sale. His offer on the first house was $89,000 and $95,800 on the second house. The bank rejected both the offers. Thomas refused to accept ‘no’ from the bank. He got down to identifying the cause of the rejection. He met with concerned officials to renegotiate the short sale deal and submitted some additional documentation to justify his offer without increasing the amount.

Thomas was able to get both the properties for a total of $60,000 below the market value. He rehabbed the first property for $3,500 and put it on the market for sale. He decided to keep the second property for some more time. This property fetches him $13,200 per year as rental income. His mortgages work out to $400 per month, while he makes $700 in monthly positive cash flow from the rent. It has been an excellent deal for Thomas as a beginner. 

Short sales of pre- foreclosure properties can be a very lucrative business venture. A viable strategy, good negotiation skills and persistence in executing your plans can be very rewarding.

 

Do you own real estate articles or stories and want to share with other investors? 
You have chance to win $100 Amazon Gift Certificates. We will give away 3 prizes for top authors each month!

Email your articles or stories to:  articles@buyincomeproperties.com

 

© Copyright 2001 - 2010 by BuyIncomeProperties.com               

 

 

Visit Real Estate Forums for every real estate investing topics!  Enter Here

    

Top of Page