Short Sales, Reos Or Motivated Sellers – Which Is The Best Real Estate Investing

In a real estate market with so many deals lying on the market, most real estate investors get confused where to get the best investment deals.

Do you get foreclosed REOs from the bank? Should you negotiate short sales to buy the houses for less than the mortgage balance? Or should you buy directly from the motivated sellers?

These 3 scenarios are analyzed in this article.

Each method has its good and bad sides; let's look at each one:

1) Buying bank owned 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.

These properties can take a long time to sell; there are few buyers in this market.

Banks are therefore willing to sell them less than their market value, even more so if they need repairs.

As a real estate investor, shop carefully for good REO deals because not all them will meet your buying criteria or equity margin for you to make a profit.

2) Short Sales
Banks foreclose on houses where the mortgage is in default. Banks prefer to take less than the mortgage balance than to foreclose if your offer looks good. This is called a short sale.

Typically, a bank will do an appraisal to know the exact value of the home. 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.

The holder of a second mortgage can lose all their money in a foreclosure, so are more willing to negotiate. It is not unusual to get 80-90% discount on a second mortgage.

It therefore makes a lot of sense to do a short sale on a property with more than one mortgage.

Short sales can also take a long time, usually 3 to 6 months. You must therefore have enough patience and capital to last you through such long waiting periods.

Banks can also turn down your request even when all numbers look good. You must therefore be ready for rejection.

You must close fast as soon as you get an approval. Banks will not accept creative financing on short sales.

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.

You also get the flexibility to negotiate easily if the mortgage balance allows. 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.

In a market full of deals in default on their mortgage, whether you buy houses, sell houses or even wholesale them, you can close a lot of deals more efficiently using a real estate investor website for wholesaling houses that also build your buyers list automatically. Learn more from http://www.realestateinvestorswebsites.net/website-types/wholesaling-houses.php