Posts Tagged ‘Obligation’
Purchasing Real Estate on a Short Sale
Jodi Funke asked:
A short sale occurs when a lender agrees to allow a homeowner to sell their home for less than the amount owed on a mortgage. Why would he do this?
How the Lender comes out a Winner
While it may seem surprising that lenders would accept less than they are owed, they do benefit from the process. The lender is going to take a loss either way. He might go through the long, costly process of foreclosure and then another long process of evicting the homeowner, fixing up the property, listing it for sale and ultimately selling it for less than he has invested. His other option is to accept a short sale now, avoid the foreclosure process and avoid being stuck with a difficult to sell property.
How the Homeowner Benefits
A foreclosure is very damaging to one’s credit report; with a short sale, the homeowner is doing their part to meet their obligation to the lender while minimizing the damage to their credit history.
Great for the Buyer
Though the process of a short sale can be frustrating, the buyer benefits by purchasing real estate at a reduced price; often for pennies on the dollar. Buyers who are looking to negotiate a short sale should work with real estate professionals who are experienced at handling these transactions.
Sometimes the buyer is one who will be fixing up the home for their primary residence. Often, the buyer is an investor who is looking to “flip” the property for a profit. Lenders who accept a short sale frown on investors who profit from the very property that they took a loss on! This is the reason for seasoning requirements; owning the property for a certain length of time before reselling.
Jodi Funke is the founder of http://www.cashforshortsales.com a company who specializes in short sale transactions. Jodi is a transactional lender who provides funding for the investor to purchase a property on a short sale and sell the property for a profit the same day. Their team of real estate professionals, attorneys and title companies are experienced at handling these transactions while working at the highest level of integrity.
La Mirada Real Estate
A short sale occurs when a lender agrees to allow a homeowner to sell their home for less than the amount owed on a mortgage. Why would he do this?
How the Lender comes out a Winner
While it may seem surprising that lenders would accept less than they are owed, they do benefit from the process. The lender is going to take a loss either way. He might go through the long, costly process of foreclosure and then another long process of evicting the homeowner, fixing up the property, listing it for sale and ultimately selling it for less than he has invested. His other option is to accept a short sale now, avoid the foreclosure process and avoid being stuck with a difficult to sell property.
How the Homeowner Benefits
A foreclosure is very damaging to one’s credit report; with a short sale, the homeowner is doing their part to meet their obligation to the lender while minimizing the damage to their credit history.
Great for the Buyer
Though the process of a short sale can be frustrating, the buyer benefits by purchasing real estate at a reduced price; often for pennies on the dollar. Buyers who are looking to negotiate a short sale should work with real estate professionals who are experienced at handling these transactions.
Sometimes the buyer is one who will be fixing up the home for their primary residence. Often, the buyer is an investor who is looking to “flip” the property for a profit. Lenders who accept a short sale frown on investors who profit from the very property that they took a loss on! This is the reason for seasoning requirements; owning the property for a certain length of time before reselling.
Jodi Funke is the founder of http://www.cashforshortsales.com a company who specializes in short sale transactions. Jodi is a transactional lender who provides funding for the investor to purchase a property on a short sale and sell the property for a profit the same day. Their team of real estate professionals, attorneys and title companies are experienced at handling these transactions while working at the highest level of integrity.
La Mirada Real Estate
Purchasing Real Estate With Zero Down
john asked:
You can buy real estate with minimal funds or zero money down! The key is learning how to leverage your resources to control a lot of properties. In this article, I am going to explain how you can make money simply by applying a few techniques I’ve used over the years. Interested?
One of the techniques I like to use is “Subject to Financing” aka “Owner Financing”. With this technique, you purchase the property from the seller by simply taking over their existing mortgage. The mortgage stays in the seller’s name and without obtaining financing you own the home. Not a bad deal from my view point.
State to state the rules to “Owner Financing” differ. In fact, several states are attempting to pass legislation to ban this practice. So it would be wise to consult with a local attorney to verify if the laws have been passed that prohibit you from this practice. Regardless, this is still the best method of easily financing a purchase.
What about the “due-on-sale’ clause that most mortgages contain today?
Although it is true that the lender does have the right to call the loan due, but not the obligation to do so; it makes absolutely no sense in today’s poor economical times. It makes more sense for a bank to settle for receiving the monthly mortgage on time rather than force it into foreclosure.
Why would the seller agree to place their credit at risk?
A motivated seller is desperate to eliminate the responsibility for payments. You are offering them the opportunity to remove the burden of trying to make the payments when it is impossible; thereby removing them of the pain and stress they’ve had to endure. Even though the seller remains financially responsible, your financial contribution actually improves their credit. You are making payments that they just could not afford.
By far “Subject to Financing” is the best offer if your state does not prohibit it. This option should be the first one considered. It is a situation where all parties win. The bank benefits by receiving timely payments. The seller benefits from debt relief. And best of all, you benefit by leveraging a small amount of money to finance your real estate transactions.
Over the years, I’ve encountered several couples that were desperate to sell. Had their state permitted the “Subject To Financing” option, I may have been able to help. There is a down side though to buying property that is still financed by a bank. Like the seller/owner, you are sitting on property hoping to sell it. With this economy, it is impossible to move property fast enough for it to be beneficial to me. I would in fact become just as much a nervous mess as the seller I got the home from. The best option in my professional opinion is using “Owner Financing”. It is more profitable for the real estate investor, and isn’t that what this is truly about.
La Mirada Real Estate
You can buy real estate with minimal funds or zero money down! The key is learning how to leverage your resources to control a lot of properties. In this article, I am going to explain how you can make money simply by applying a few techniques I’ve used over the years. Interested?
One of the techniques I like to use is “Subject to Financing” aka “Owner Financing”. With this technique, you purchase the property from the seller by simply taking over their existing mortgage. The mortgage stays in the seller’s name and without obtaining financing you own the home. Not a bad deal from my view point.
State to state the rules to “Owner Financing” differ. In fact, several states are attempting to pass legislation to ban this practice. So it would be wise to consult with a local attorney to verify if the laws have been passed that prohibit you from this practice. Regardless, this is still the best method of easily financing a purchase.
What about the “due-on-sale’ clause that most mortgages contain today?
Although it is true that the lender does have the right to call the loan due, but not the obligation to do so; it makes absolutely no sense in today’s poor economical times. It makes more sense for a bank to settle for receiving the monthly mortgage on time rather than force it into foreclosure.
Why would the seller agree to place their credit at risk?
A motivated seller is desperate to eliminate the responsibility for payments. You are offering them the opportunity to remove the burden of trying to make the payments when it is impossible; thereby removing them of the pain and stress they’ve had to endure. Even though the seller remains financially responsible, your financial contribution actually improves their credit. You are making payments that they just could not afford.
By far “Subject to Financing” is the best offer if your state does not prohibit it. This option should be the first one considered. It is a situation where all parties win. The bank benefits by receiving timely payments. The seller benefits from debt relief. And best of all, you benefit by leveraging a small amount of money to finance your real estate transactions.
Over the years, I’ve encountered several couples that were desperate to sell. Had their state permitted the “Subject To Financing” option, I may have been able to help. There is a down side though to buying property that is still financed by a bank. Like the seller/owner, you are sitting on property hoping to sell it. With this economy, it is impossible to move property fast enough for it to be beneficial to me. I would in fact become just as much a nervous mess as the seller I got the home from. The best option in my professional opinion is using “Owner Financing”. It is more profitable for the real estate investor, and isn’t that what this is truly about.
La Mirada Real Estate