Anyone can do this regardless of age, gender, background, or education.
Most people are similar across many demographics. Some have never graduated from college, others hold Ph.D's. Some are doctors, lawyers, and engineers...others are mechanics, salesmen, and nurses. But anyone of them, or you, can learn to increase your wealth through Short Sale Magic.
Most people are similar across many demographics. Some have never graduated from college, others hold Ph.D's. Some are doctors, lawyers, and engineers...others are mechanics, salesmen, and nurses. But anyone of them, or you, can learn to increase your wealth through Short Sale Magic.
A short sale is a real estate transaction where a potential home buyer negotiates with the lender to accept less than is owed on the note. It is typically easier to get the bank to cooperate if they are in the second position on the home rather than in the first position however, a home with only a first mortgage is still a candidate for a potential short sale.
If an investor is offering to save the home from foreclosure and is willing to pay $5,000 for a $50,000 second mortgage, many lenders will accept this offer rather than get nothing if the home goes to auction.
In this scenario, the investor literally created $45,000 in equity out of thin air – equity that didn′t exist before.
A short sale can also be done on a home with only a first mortgage
The following numbers are an example of a real transaction:
The home appraised for $169,000 but was encumbered by a first mortgage for $195,000. Now, some may ask how this happened? With today′s easy lending policies, it′s not hard to get a home leveraged to 125% – 150%. How the home owner got themselves in this predicament isn′t important, what′s important is how the deal was structured.
After several negotiations the lender accepted $128,000 for the $195,000 note. So the buyer was able to purchase a home worth $169,000 for only $128,000 – creating $41,000 in equity overnight.
But it gets even better. The current home owner stayed in the home as a lease option tenant with a 1-year lease option. Once they got their credit repaired, they purchased the property back at $169,000 and be able to stay in their home.
So, under this particular scenario, a buyer was able to keep the home owner from having to foreclose, which was also good for the bank.
Why would a bank accept less than is owed?
This is a great question and one that can be easily answered. A lender will do almost anything to avoid foreclosure, it looks bad on their books and affects the rate at which they can borrow money. If a homeowner falls behind on their payments and it appears the home will need to be foreclosed on, the second mortgage holder will usually get nothing if the home goes to auction because the home is typically sold for a price that is right at what is owed on the first mortgage.If an investor is offering to save the home from foreclosure and is willing to pay $5,000 for a $50,000 second mortgage, many lenders will accept this offer rather than get nothing if the home goes to auction.
Here is an example:
In this scenario, the investor literally created $45,000 in equity out of thin air – equity that didn′t exist before.
A short sale can also be done on a home with only a first mortgage
The following numbers are an example of a real transaction:
The home appraised for $169,000 but was encumbered by a first mortgage for $195,000. Now, some may ask how this happened? With today′s easy lending policies, it′s not hard to get a home leveraged to 125% – 150%. How the home owner got themselves in this predicament isn′t important, what′s important is how the deal was structured.
After several negotiations the lender accepted $128,000 for the $195,000 note. So the buyer was able to purchase a home worth $169,000 for only $128,000 – creating $41,000 in equity overnight.
But it gets even better. The current home owner stayed in the home as a lease option tenant with a 1-year lease option. Once they got their credit repaired, they purchased the property back at $169,000 and be able to stay in their home.
So, under this particular scenario, a buyer was able to keep the home owner from having to foreclose, which was also good for the bank.