How Vacant Properties Turn a Short Sale Into a Treasure Hunt
Every neighborhood has them. Every property investor is intrigued by them.
Drive through the streets of your town and you’re likely to see them, too. Homes without people to fill them often seem like an investor’s dream. While they certainly can yield a handsome profit, be prepared for a frustrating (and exciting!) short sale experience – getting a deep discount on the amount of the mortgage owed when you buy a house before it gets sold at the sheriff sale.
One of the most difficult situations to deal with in short sale investing is, in fact, the vacant property. An empty home does not mean an investment is impossible. It can, however, be a bit complicated. What is so dangerous about this type of investment is the misconception that a vacant property is fair game to any investor who comes along.
That could not be further from the truth.
The most important thing to keep in mind during a short sale is that even though the owners are in financial trouble, even though they are not paying their mortgage, and even though they may not actually live in the home, their name is still on the deed and they are still legally the owners. This means that before you even consider dealing with the bank you must have their permission.
This is normally an easy process, as the sellers are usually more than willing to cut a deal that saves them from foreclosure, almost always at NO additional cost to them. Many of these sellers owe more on their loans than the property is even worth. That gives the short sale investor a major advantage, yet one problem remains: You have to find them first!
An absent homeowner could be anywhere. They could be with a relative or friend, and their current residence may be listed under another last name. There may be a separated couple involved, which can add to the complications. Either way, you need to find them. You cannot call a bank and negotiate a short sale without the owner’s permission.
Vacant properties can be a worthwhile investment, however you must be willing to put in extra time and even experience a little extra anxiety. Even after you’ve located a seller and negotiated with the bank, the deal is not complete until the seller arrives (and signs) at closing.
Don’t eliminate the idea of a vacant property from your future investments. They are often excellent deals and ultimately worth the extra time.
I don’t know if it is always possible to find these elusive sellers. Nevertheless, I do know that if you are bit on the adventurous side and you don’t mind a little investigation with your investment, the vacant property short sale is right for you!