The real estate market has taken a mighty turn for the worse. Foreclosures, short sales and banked owned properties are making up the bulk of sales in todays market. It was not long ago that real estate agents had the pick of the litter when it came to property listings. Properties would sell quickly, and we were in a sellers market just a few years ago.
Today, all has changed and many Realtors have shifted gears. With all the distressed properties for sale it has become a buyers market. Buyers are the ones calling the shots and if they dont get their price they go looking elsewhere. Thus, it has become difficult for real estate agents in making sales and many have left the trade and others have seriously change the way they do business.
As an investor and a Realtor I began investigating, about three years ago, a company that bought and sold home foreclosures at what we would call wholesale prices. Let me explain the process. There are basically three sources from which one can purchase properties that are in the process of what we call foreclosure. A foreclosure may be purchased at the Sherrifs sale or auction and from the bank, often called an REO. A third source of purchase is through a process called a short sale. In a short sale the bank has to approve the property being sold for less that what the mortgage holder owes. Its typically a process than can take about 8 months or longer and often can result in a deficiency judgment against the mortgage borrower. The bottom line is that he/she owes the difference between the sale price and the judgment or balance due to the bank on the home. So, if you are looking at the possibilities of buying foreclosures or short sales there are some guidelines to follow.
Buying wholesale is simply buying the home for less than market value. What many of us dont realize is that the time and energy required to buy a foreclosure can become very stressful. Often, after months of hard work, you end up losing the purchase. The process of buying a foreclosure at 50-70% below market value, rehabbing it and flipping or renting it has become big business in todays market. Several companies have learned that buying the home at deep discounts below market value and re-selling the home at wholesale price creates investors. Moreover, it creates repeat buyers and frees up cash to buy more homes. When people make money off these purchases they come back for more.
I liked the process so much; about two years ago I purchased two homes using this unique method. Both of my properties are in Aurora, Illinois- and are rented. What I learned is that you can buy properties that deliver instant equity at closing and generate a positive cash flow when rented. This result will depend upon where you purchase the home and the company you are buying it from. My experience has been very positive and stress free and would recommend it to most people that are looking to invest. It is also a great way to get your own personal residence.
If I sparked your interest in foreclosures please be sure to do your homework. Foreclosures can be a great source for income and I wish you well in your investments.
