Investors Buy Short Sales
Short sales are great opportunities for real estate investors. A short sale requires bank approval because the seller is requesting that the bank accept a lower payoff amount that is actually owed on the mortgage.
Of course the bank is not willing to allow the house to sell for any less than they believe is the current market value, but they often do approve short sales at a lower than market price. This is why short sales are good opportunities for investors looking to buy real estate at a discount.
One of the biggest reasons banks are willing to allow short sales below market value is because they risk having to foreclose on the property if the homeowner walks away. The legal and liability risks are calculated by the bank to determine their minimum price for a short sale.
The last thing banks need right now is to own more homes through foreclosure. It is better for them to approve a short sale. Otherwise, they risk taking ownership and having the property sit vacant. They then incur costs to maintain the property and must pay the property taxes while the condition of the property deteriorates over time.
Short sales are a win-win situation for the homeowner who is upside down on their mortgage, the bank who wants to avoid foreclosure, and the investor looking to buy real estate at a discount.
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