In today's market, with foreclosures at record highs, and many sellers owing more money than their property is worth, banks (and sellers) are now willing to do things that were virtually unheard of just a few years ago.
With a fundamental situation that presents us with literally thousands of properties being "dumped" on the market with each passing month, and most of those properties having little or no equity, it is getting more difficult to sell any property for full value.
Listings are sitting on the market for months, and many of those listings are going into foreclosure, leaving many agents with less income and no way to sell their listings for what the seller actually owes.
As a result, selling a property "short" of what is owed on the mortgage has become fairly common.
Anyone may negotiate a short sale.
You do not have to be licensed to negotiate with a lender or bank.
You merely need to follow the specific procedures necessary to complete a successful short sale.
There is also a greater need for agents and brokers to understand how to use short sales to help their sellers sell and their buyers buy.
If you are an agent you can use short sale strategy to save your listing commissions and help a client avoid foreclosure.
A "Short Sale" means getting the lender to sell a property for a discount below the amount the owner owes for the property.
With the growing number of foreclosures, more and more lenders are having to resort to short sales in order to move inventory that cannot be sold for enough to cover the payoff.
We are seeing more short sales and hearing incredible stories from around the US about short sales in some areas where the lenders are discounting properties by as much as 30 to 70 percent! This results in a very profitable deal when done correctly.
But this strategy requires a certain amount of expertise, not to mention specific forms, letters and procedures.
You have to know what you are doing.
But if you do, you can create opportunities by getting discounts amounting to tens of thousands of dollars, that can turn "no sale" into a great opportunity.
If you are also an investor you need to know how to use this strategy to add bigger equity spreads to your own investments.
Buying at a discount will help insure strong positive cash flow on rentals, with higher equity spreads.
It's the "safe" way to go in an eroding market.
There is no need to languish in this market - you must adapt to the changing market conditions with strategies that take the fundamental market conditions into account.
Current reports from the Federal Reserve indicate that we could see another 3.
6 million foreclosures over the next two years.
As we head into 2012, the banks have finally recognized the need to seriously consider accepting offers that are "short" of the payoff amount, as a way to avoid foreclosures or get existing foreclosures off their books.
If you are looking for ways to make more money in a tough real estate market, this could be your ticket.
Short sales help homeowners avoid foreclosure, and it may be the only way to make a particular deal work for an investor or home buyer.
In today's market short sales are a timely and important strategy to have in your toolbox.