If you’ve resisted the foreclosure market in the past because there was a lot of competition or because banks weren’t so willing to work with you on the short sales, it’s time to move past it! You see, even though people are still trying to break in to the foreclosure market, the “speculators” who called themselves investors over the past few years are gone! So… that leaves room for the cream of the crop to really rise.
On top of that, many serious investors have been tapped out, holding on to properties they acquired when the market was at it’s peak, and now cannot unload. There are more investors going into foreclosure because they bought the “wrong kind of deal” than ever in the past. So… this is prime time for new investors or investors that were not able to really get going because of the competitive market. Investors that are still in the game now are really working together and building their teams of investors. They’re back to specialieing and referring out the deals that don’t fit their own models. The feast or famine mentality is going away – FAST! and investors are once again working together!
Add all of to the fact that banks can no longer afford to NOT short sale. Lender after lender is going belly up, taking back properties that have no chance at all to sell for the mortgaged amount. They are left with two choices: 1. Take back the propertyÂ after the foreclosure sale and try to (1) Sell it with a Realtor; or (2) Short sale now and get out.
Naturally, the question is: Why would a bank take a huge discount when they can take the property back and then sell it themselves?
- Banks are not in the business of owning property or property management
Once they take back a property, they have to maintain the property, deal with code issues, break-ins, and vandalism to say the least. If they don’t continue to pay the utilities and maintenance, the property may go into further disrepair and consequently command an even lower offer price.
- Foreclosures Cost the Bank Money
It’s not as simple as just taking back the property for the amount of the mortgage. The bank incurs thousands – sometimes even tens of thousands – of dollars in legal and court costs and fees to go through the formal foreclosure process. If they are able to sell the property prior to taking it back, they can reduce the fees.
- Properties Are NOT An Asset to the Banks
REO properties are considered liabilities on the banks books. Different lenders have different criteria, but for every $1 of bad debt, the bank reduces it’s lending power. For instance, some banks have a 10 to 1 ratio meaning that for every $1 of bad debt, they lost the ability to lend $10. Add some zeroes and you can see the problem. 100,000 of bad debt reduces the lending power by $1,000,000. So… they are not even able to recoup the loss while it’s on the books.
So… if you’ve been thinking aboutgetting into the foreclosure frenzy, the time is now. Literally, on a daily basis, I’m getting 1-3 referrals for short sales! You can even make money by simply packaging the short sale and communicating with the lenders for investors or real estate agents that are too busy or don’t want to for a flat fee!