5 Reasons Investing in Short Sale Property is a Good Idea
“Short sale” is the term for when a bank lets a homeowner who is behind on payments sell the home for less than what is owed to the bank. The home sells at a substantial discount, but the bank doesn’t have the cumbersome expenses of a foreclosure suit, eviction or repairs.
For investors who are looking for a bargain, a short sale definitely has its perks.
Flexible financing options
A short sale almost always takes place because a homeowner is already several payments behind schedule. The bank isn’t making money on the property because payments are not coming in, so they typically offer more favorable financing terms to investors as a way to sweeten the deal.
Short sales are usually cheaper than foreclosed or new homes because banks don’t want to have to pay for repairs. If you’re willing and able to pay for the work to be done once you buy the home, you may come out with a better deal on a short sale.
Repairs are usually less severe in a short sale than in a foreclosure. Short sales typically still have someone living in them during the sale, which means the vandalism and squatters that plague many foreclosures aren’t an issue. And because the transfer of property is relatively amicable, the owner is less likely to trash the place out of spite for the bank. Short sales may still have a few neglected maintenance issues, due to the owner’s financial hardships, but these will almost always be less than those of a foreclosure.
Another advantage of short sales is being able to talk to the sellers and their agents about the home. You can ask them what repairs are needed that they know of, what the neighborhood is like, and what the home’s typical monthly costs are. This information is unlikely to be available during a foreclosure sale, and it can help you decided whether the home — and sale — are right for you.
Most homeowners would rather short sell than be foreclosed on. Short sales won’t show up negatively on a credit report and won’t require an eviction notice, which would show up later if the owner chooses to rent a home or apartment. Because of this, owners are usually more cooperative when it comes to transferring ownership.
If you’re considering investing in a short sale, Real Property Management Evolve Tucson Tucson can help. Give us a call at 520-883-RENT, or 520-883-7368, to get started.