Wilmington and Burgaw Area Real Estate News

In a market full of mortgages going into default, a lot of real estate investors are never sure which way to go to get the best deals. Should you get bank REOs? Should you negotiate short sales to buy the houses for less than the mortgage balance? Or do you stick to buying houses directly from motivated sellers? These 3 methods all have their pros and cons; let's analyze each one:

1) Buying bank foreclosed REOs
Banks have a lot of foreclosed houses in their hands and they pile up more every day. As soon as they acquire them, they then try to sell them quickly. There are few buyers, and these properties can sit on the market for a very long time and still get no buyers. Banks are therefore willing to sell them less than their market value, even more so if they need repairs. Real estate investors should shop carefully because not all of them are profitable.

2) Short Sales
Banks foreclose on homes when home owners are unable to pay. Before they foreclose, they are often willing to take less than the mortgage balance. This negotiation is called a short sale. First a bank has to do an appraisal to find out the true market value. Then they can give you a discount on the mortgage based on their numbers. The holder of a first mortgage is less willing to negotiate, offering usually not more than 20% discount. A bank that holds a second mortgage can lose 100% of their investment in a foreclosure, so they are more willing to negotiate much lower. It is not unusual to get 80-90% discount on a second mortgage. A property with more than one mortgage is therefore the best candidate for a short sale.

Short sales can take 4-6 months. You must therefore have enough patience and capital to last you through such long waiting periods. Banks can reject your short sale application even when all numbers look good. You must therefore be ready for rejection. Lastly as in REOs, you must close fast as soon as your short sale is approved. Creative financing is not acceptable to banks. When all is said and done, you can create a lot of equity and profits as long as you select the right deals, have patience to wait for a long time, can take rejection and you can close fast.

3) Motivated sellers
You can employ a wide variety of techniques to buy houses from motivated sellers. This includes creative financing. If the mortgage balance allows, you can also negotiate with flexibility directly with the motivated seller. And you can be as flexible as you need when closing, e.g. you can wholesale a deal right from a motivated seller to a wholesale buyer. As long as you can target people who need to sell their houses, this is the best way to buy investment properties.

Tammy Barnes -(910)471-5579 - Realtor - Burgaw, NC Real Estate - Wilmington, NC Area

Search for homes and land in the Wilmington, NC, metro area, including Leland, Hampstead, Burgaw, Ogden, Castle Hayne, Carolina Beach, Kure Beach, and Wrightsville Beach. You will also find information on the buying and selling real estate process, including preparing your home for sale and qualifying for home loans.