Distressed Sales Share Drops to 10-Year Low

Source: https://thinkrealty.com/distressed-sales-share-drops-10-year/

ATTOM Data Solutions, released its Q3 2017 U.S. Home Sales Report shows that distressed home sales — including bank-owned (REO) sales, third-party foreclosure auction sales, and short sales which accounted… more

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Are you thinking of investing in property? However, you do not have enough cash to accomplish this. Here is a tip you may use as long as the person selling the property is willing to negotiate with you.

To be fair, not every seller will be willing (or even understand) the concept outlined. Your best wager is to find a property that the owner has great desire for selling, whether because of moving, a divorce settlement, or frustration with tenants.

Actually, if you are currently renting and considering using this strategy perhaps your landlord would be happy to assist you! There are some variations that may be used depending on you and your seller. Do they need the market price or are they just eager to get out from the monthly payments – perhaps facing foreclosure?

The easiest method is to take over their mortgage obligations – called ‘assuming’ the mortgage. You will have to be approved by the initial lender to assume the mortgage. If you cannot get approved for an assumable mortgage you may also try a ‘subject to’ assumption where you merely make obligations while the property remains in the seller’s name.

You take over the original mortgage and create a 2nd mortgage on the remaining cost of the property with the seller. Offer a high, interest-only payment for a short time period – two or 3 years. Instead of having the money stay in a bank they can be getting a high interest over two or three years with the remainder due in full at the end of the term.

When the term ceases you ought to be able to refinance the cost, or else you can sell. Unless you hit an actual bad market the value of the property should have risen in that time.

A lot of mortgage lenders merely need to make a great investment. While your local bank could still be scared there are plenty of financial lenders that would like to make a deal. Financiers like property investing. The mortgage is usually based on 60-70% of the value of the property, so as long as they know they get their money back in the value of the land if you default, they don’t care what sort of revenue you make. Conclude the deal with a 2nd mortgage created with the seller. If you default they could still foreclose on the property and sell it, settling the existing mortgage with the proceeds.

Now you can see the entire picture. It is good that seller and buyer may work together. In the event that they can’t wait for a sale, you may still give them their initial price with a little versatility on their part.

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