A Comprehensive Guide To Finding Short Sale Listings

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Resourceful real estate investors that know how to find short sale listings could potentially be granted access to some of today’s best deals. Perhaps even more importantly, however, short sales have developed a reputation for helping each party involved in a transaction. A properly executed short sale has the potential to land an investor a great deal, help a homeowner avoid foreclosure, and prevent the bank from repossessing a non-performing asset.

What Is The Process Of A Short Sale?

A short sale is a sale in which a bank or subsequent mortgage holder agrees to let their borrower sell the subject property for less than they owe on the existing mortgage. The process awards borrowers in precarious “underwater” situations to ease their financial burdens. With the lender’s permission, borrowers may sell the home for less than it’s worth in order to avoid foreclosure and devastating blemishes on their credit report.

Purchasing a short sale is nothing short of a huge benefit to distressed homeowners, which begs the question: Why would a lender agree to accept less than what is owed? What do lenders stand to gain by accepting less than they were originally promised?

The answer is simple: a chance to offset potentially larger losses in the future. If for nothing else, short sales are an attempt by banks to mitigate future risk. It is unequivocally better for the loan holder to accept less money at the time of a sale than to repossess a non-performing asset.

It is important to note that banks and institutional lenders are not in the business of holding onto mortgages, let alone non-performing ones. In repossessing a property, banks not only lose out on the mortgage payments and interest once promised by the borrower, but they are then forced to hold onto the property, costing them untold thousands of dollars in the meantime.

When all is said and done, it may be worth it for the bank to accept a lower offer on behalf of a borrower to avoid the lengthy and costly process that has become synonymous with foreclosures. Therein lies the true benefit of working with short sales: lenders may be willing to sell the home for a discount in the right situation.

Approved short sale listings represent a great opportunity for each party involved in the impending transaction. Not only is the bank awarded the opportunity to avoid taking on a non-performing asset, but the seller may avoid foreclosure and the buyers may find themselves with a great deal.


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Short sale listings

Unique Ways To Find Short Sale Properties

Investors intent on locating a short sale of their own should consider using multiple avenues, not the least of which include the following strategies:

  • Customize Your MLS Inquiries: The Multiple Listing Service (MLS) has become one of the most trusted sources for real estate professionals to find and procure properties. As a comprehensive database of listings, the MLS allows its users to customize their searches for a more efficient experience. More importantly, there’s a search filter designed specifically to identify short sales. Simply filter your next search appropriately, and you’ll be given access to approved short sale listings near you.
  • Contact Your Nearest Realtor’s Office: Even distressed properties are represented by a selling agent, whether it’s a Realtor or a real estate agent. What many people don’t realize is that most real estate offices actually have a list of names to contact in the event one of their agents is tasked with selling a short sale. It is entirely possible for investors to get on such a list in their own area, provided the office has one. Simply get in touch with your local real estate office and provide them with your contact information. In the event a short sale comes their way, there’s a good chance they’ll send you information regarding the property.
  • Visit Your Local Courthouse: Short sales are often the result of homeowners who have neglected to keep up with mortgage obligations. Therefore, most candidates are considered to be “distressed” by their lenders, which report their status to the local municipality. In other words, local courthouses are more than aware of all the distressed homeowners in a given area. The information pertaining to distressed properties is all public record, readily available for any investor that knows where to look.
  • Read Your Local Newspaper: Foreclosing lenders are typically required to publish legal foreclosure notices in locally circulated newspapers. As an investor, it’s entirely possible to identify these distressed properties and suggest the possibility of a short sale. Remember, lenders would rather sell for a loss than foreclose, so it could benefit you to contact them in regards to their newspaper ads.
  • Contact A List Provider: There are typically several pre-foreclosure list provider and data broker services that will sell resourceful investors lists of distressed properties. Of course, the lists will come at a price, but they may be well worth the investment if they land a good deal. At the very least, I recommend subscribing to a list provider in your area. It is important to note, however, that these lists can contain old information, so make sure the provider you are working with is updating their data regularly.
  • Conduct Targeted Marketing: There are a number of options for investors to find distressed properties on their own. There’s no reason a savvy investor couldn’t place a Craigslist ad targeting distressed homeowners, or even initiate their own pay-per-click campaign for people Googling phrases such as “foreclosure help” or “what is a short sale.” There are a number of targeted marketing campaigns investors may implement, not the least of which include door knocking, direct mail campaigns and driving for dollars.

Pros And Cons Of Buying Short Sale Homes

Now that you have a better idea of how to find these listings, it may help to familiarize yourself with the reasons you may or may not want to consider acquiring one. After all, there are several ways to invest in real estate. Weighing the pros and cons of this strategy is just one of the many ways to determine whether or not it’s the right exit strategy for you.

Pros

Investors that know how to find short sale properties may appreciate the following benefits:

  • Short sales can often be acquired for less than the home’s current market value.
  • Approved short sale listings will often come with more equity.
  • Despite the competitive nature of today’s market, these properties are some of the easiest deals to find.
  • Since the original lender is involved, impending deals are usually complemented with all of the information an investor would want to know.
  • Short sales are typically in good shape, as the owners typically still reside in the home.

Cons

While distressed properties may represent a great opportunity to secure a deal, there are negative aspects that warrant your attention, too:

  • There is no guarantee a short sale will transpire, as the bank is given the final say––each and every time.
  • Since the process is contingent on the lender’s approval, there’s a lot of “red tape” that could potentially slow and impede the entire process.
  • Following through with a short sale will require more detail, patience and expertise than a traditional purchase.

Summary

Short sale listings have developed a reputation for awarding patient buyers with great deals. However, only those who understand how to find short sale listings and navigate the ensuing process will reap the rewards they have to offer. Therefore, before you consider taking on your first short sale deal, be sure to familiarize yourself with the process. That way, you should be able to increase your odds of realizing success.


Key Takeaways

  • Investors who know how to find short sale listings may already be one step ahead of the competition.
  • Approved short sale listings have developed a reputation for awarding patient buyers with great deals.
  • Short sales create an amazing opportunity for everyone involved in the transaction.