San Diego Short Sale Real Estate Investing
“A Short Sale is the sale of a property in which the net proceeds from the sale are less than what the property owner still owes on the mortgage.” If the property owner is unable to make the mortgage payments due to hardship, insolvency or the like, many mortgage lenders will agree to accept the proceeds of a short sale and write off the remainder of what is owed on the mortgage; freeing the homeowner of the mortgage debt. Why would lenders agree to this? Well, the alternative options cost more to the mortgage lender in the end. By agreeing to a Short Sale, Mortgage lenders can avoid: a lengthy and costly foreclosure, evicting the homeowner to take possession of the property, legal fees, damage or vandalism to the property, etc.
San Diego Short Sale Real Estate Overview
Short sales in San Diego are when a seller is behind in making mortgage payments and instead of going through with foreclosure proceedings (notice of default, auction, foreclosure), the lender accepts a lesser amount for the home. This allows the seller to avoid having a foreclosure on their record, the bank to cut their losses quickly, and the investor or purchaser to buy a property for usually less than retail or market value.
Pros of Investing in a San Diego Real Estate Short Sale:
- Create instant equity by discounting debt lender
- Rise in foreclosure rates across the country make this an expanding market
- More complicated process discourages many investors from entering
- Excellent ability to create a systematized process
- Very low risk
- Strong credit score or huge amounts of cash not needed
- Lots of education and resources available
Cons of a San Diego Real Estate Short Sale:
- Flood of investors and gurus entering this market
- Competing with Finance Buyer, Not Just Cash Buyers
- High organization skills and patience required
- Long time (2-10 months) between start and finish of each deal
- Dealing with the banks and their loss mitigators can be painful
- Changes with bank procedures can directly affect your business
Marketing Advice of a San Diego Real Estate Short Sale:
- A Lis Pendens list is the document that the lender starts the foreclosure process with and first makes the defaulted information public. It is the most targeted list, but also the most competitive. Find out what others are using by asking a seller in default to hold on to all marketing material, analyze it, and make yours better.
- Bandit signs pull well, but you will get lots of calls from people who don’t qualify, and probably a police officer or random upset neighbor now and then.
- Use sequential mailings for your direct mail marketing. Hit ‘em up multiple times in an automated fashion.
- Door knocking can be effective but very time intensive.