Whether you agree with the short sale flipping method of buying and selling real estate or not, it has become a popular method of making money through short sales.
Short sale flipping is done where an agent or investor submits a contract with the seller - usually as an option contract. The contract price is low balled, with the intent of getting the lowest approved payoff agreement from the lender(s) through a short sale.
The property continues to be marketed at the higher end of fair market value. The intent is to find a "retail" buyer at a purchase price that provides a sizable difference between the anticipated lender payoff and the higher purchase price. A contract is then executed between the higher end buyer and the agent/investor or "Owner on Record".
If the short sale is successful, the investor or agent buys the property from the seller directly through an A - B Transaction. The investor/agent, now the owner, sells the property - usually in a back to back closing - to the higher buyer through a B - C Transaction.
Depending on the geographical area and home values, the "profits" made from these transactions can be significant - far exceeding the standard "commissions" received from listing or selling the property.
But, all things must come to an end.
- The lenders are not stupid (regardless of what the government thinks). They know these transactions exist. They realize they are potentially losing a lot of money where they have the potential of getting a much higher payoff. That is why more and more lenders have begun to require that the property cannot be resold for 30 days.
- Just within the past four weeks, many of the major and not so major title companies stopped doing these transactions. They now require title to be held for 30 days or more, if they do them at all.
Most investors/agents are not going to sit on a property for 30 days hoping the buyer waits or hoping another buyer is available. The whole point of these transactions is to "quick sell" the properties with "hard money" avoiding any money out of pocket.
I will be interesting to see if these method prevails or if enough title companies are willing to buck the trend and continue to allow these transactions.
Foreclosure Prevention Network
Providing Short Sale Negotiation, Training and Loan Modification
Address: PO Box 1998 Spring TX 77383.
E-Mail: info@TrademarkForeclosurePrevention.com
Web Site: http://www.TrademarkForeclosurePrevention.com
Blog: http://www.shortsalereporter.com
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