Buying a short sale property takes time. You also have to know there will most likely be multiple offers to satisfy the lender's need for market knowledge. And despite what the property appraiser tells them, buyers will only pay so much for a property, and the lender must decide whether to accept the offers or continue with foreclosure. Lender's are carrying large portfolio's of properties and would like nothing better than to reduce the inventory, but they will only go so low on price. That depends on how desperate they are, but at this time, many lenders are not that desperate. And it is for that reaon it is best to not limit your purchases on real estate.
It can take up to 45 days to get a response from a lender when you put an offer in on short sales. They are overloaded with short sale and foreclosure contracts as well as the paperwork involved with the actual foreclosure process. Again, patience is the key. If you are an investor who has the capabilities to purchase multiple properties, then put offers in on several properties, knowing you probably won't get them all since many will have multiple offers. It is important to know that just because a home is on short sale, it does not always mean it is a great buy. It depends on how much mortgage is owed on the property and what the comparable sales have been. Do your homework or have your Realtor do a market study to see if he numbers will work. If the home is over leveraged, the lender expectations will most likely not agree with your plans. However, if there is more than one mortgage on the home, like in a foreclosue, the 2nd lienholder will most likely be dismissed or get very little from the proceeds of the short sale, so base the offer on the first mortgage amount.
The short sale, again, is a wonderful opportunity to get a great bargain with built in equity. The property may very well not have a big mortgage on it, but because the owner may own multiple properties and is over extended, or has lost a job and just can't make payments, your new equity position can be very profitable.
With lender's tightening their restrictions on loans, you will most likely have to put more money down for your new mortgage, especially if it will be an investment property. The great news there is that with a smaller monthly payment, you can undercut the rental market to get a tenant in quickly, and still show a positive cash flow. Do not purchase short sales, or any real estate for that matter if you are on a shoe-string budget. This is a market where cash is king and the rich will get richer. Many experts are saying by the end of 2008 into 2009, investors will be buying back into real estate. Why would you wait until everyone else is buying when prices start to rise again. That is why 1st & 10 Properties, Corp. is getting into the market now, to lead the pack and secure our place in the Sarasota market.