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Take Advantage of the Real Estate Market



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By : Karim El Sheikh    99 or more times read
As the New Year dawns, many people are making all kinds of resolutions: social, personal, and financial. With the continuing economic downturn, people are looking for new ways to invest and increase their income. While many are hesitant and cautious, there are many opportunities for the savvy investor to take advantage of. One such opportunity for the upcoming year is the purchase of distressed real estate.

The Nature of Distressed Real Estate

With the collapse of the housing bubble, many banks and lending institutions are willing to engage in short sales, or to sell foreclosed properties at incredibly low prices.

The more traditional form of action that a lending institution takes when a borrower fails to pay a mortgage is to engage in foreclosure. A foreclosure is legal action taken by the lender in order to remove a borrower’s equitable right of redemption. It is this equitable right of redemption that allows a defaulted borrower to retain possession of a property if the debt has been paid. When it is clear that the borrower will not, or cannot re-pay the debt, the lender will seek to foreclose their equitable right of redemption. Afterwards, the lender can be assured that the property can be repossessed with as little hassle as possible.

Often, a lending institution will attempt to moderate their losses from a foreclosure by selling the property as quickly as possible, which means they are most likely willing to sell the house for much less than it is worth. The savvy investor who is looking to enter the real estate market in 2011 will most certainly seek out the purchase of foreclosed property in order to maximize the profit from the investment.

In lieu of foreclosures, short sales are becoming increasingly common as more banks are recognizing the benefits of a short sale. Essentially, a short sale occurs when the proceeds of the sale will not cover the remaining balance on a mortgage. In contrast to foreclosure, a short sale must be agreed to by both parties involved, the lender and the borrower.

When borrowers are unable to pay the remaining balance of their loans, banks are increasingly finding that taking a slight loss by selling the property quickly for less than the original loan is more profitable than subjecting the original borrower to continued pressure and eventually engaging in foreclosure. As short sales will no doubt remain popular with banks, or even increase in frequency throughout 2011, potential real estate investors are presented with a fantastic opportunity. Because the bank is willing to part with the property at a recovering loss, the investor stands to gain a property known to be worth more than what the investor will pay for it. For someone looking to enter the real estate market, 2011 will be sure to have plenty of lucrative opportunities.

Things to Look Out For in Short Sales

While a short sale may seem like the best situation to buy in, there are some small caveats. Since the short sell occurs only when both parties, the borrower and the lender, agree to it, if either party removes consent, then the sale is stopped. While any deposit will most likely be refunded, other costs, such as house inspections, cannot be regained.

To prevent this annoying and perhaps costly situation, look for a short sale of a vacant property. If the borrower has physically left the property, then it is unlikely that the borrower will remove her or his consent from the short sell; however, the bank could still pull out of the deal. However, some short sales will even be listed as “bank approved short sales” by real estate agents, meaning that a real estate agent has confirmed the bank’s intent to sell.

As New Year’s passes, many life changing resolutions will be made. If that resolution is to enter the real estate market, it bears much potential in 2011.
Foreclosure.com is the top online resource for your real estate investment needs. Find foreclosures, preforeclosures, rent to own homes, and bankruptcy listings.

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