How to Find Houses to Flip | Short Sales
Big question...many answers. We touch on one of the best ways to find houses to flip today....
We've touched on many aspects of house flipping including the house flipping mindset, how to get started flipping houses, how to use partners in flipping houses , how to flip houses with no money as well as how to find houses to flip with real estate agents...just to name a few.
Now its time to talk about another way how to find houses to flip using a different kind of agent, the kind who deals in "short sales"...namely, the short sale specialist.
How to Find Houses to Flip: Short Sale Specialists
Short sale specialists are typically (but not always) real estate agents who have become experts in negotiating short sales.
What's a "short sale" you say?
The definition of a short sale is:
"a property sold by a seller by a real estate agent for less money than what the seller owes the bank who holds the mortgage"
When a seller does this, it could save the seller from being foreclosed on and may save their credit rating in the process. The biggest question that many house flipping pros have is whether the property can in fact be sold short enough to be attractive to real estate investors or house flippers. In most cases, it can be.
The best kinds of short sales for house flipping purposes are in cases where the owner has moved out of the house before being foreclosed on. In many cases, neglect and damage occurs and this then creates a solid opportunity for house flipping.
Negotiating With The Bank to Find House Flips
In many short sales, the bank who owns the property sets a higher than market value price. In this case, the house flipper needs to wait for the price to come down and not dive in prematurely.
Oftentimes the property does not have enough equity for the homeowner to sell at a good price. As you may know, equity is the difference between the property’s market value and what is owed on the house. In many cases with short sales, the homeowner owes more on the mortgage than the house can fetch on the open market.
If you happen to come upon a homeowner who is facing foreclosure, you the house flipper can put the house under contract for less than the value of the mortgage.
Crazy as this sounds, its true. There's only one condition is that you have to convince the bank to forgive either a portion of or the entire existing loan. If that occurs, you can buy it at a negotiated price.
How to Use Short Sale Specialists to Negotiate The Purchase
There is one of two ways that you can use short sales as a tactic to find houses to flip:
- You can either contact the bank’s loss mitigation department and ask them if you can help them mitigate losses on their properties they have foreclosed on or are about to foreclose on.
- If you are not comfortable with doing it alone, contact a short sale specialist and have them do the heavy lifting. They may know which banks handle foreclosure in this way. Every bank is different as to how they list and handle foreclosures, so this technique may require someone like a short sale specialist who knows the ins and outs of the different area banks.
Where to Find Short Sales and Short Sale Specialists
One of the best places to source short sales and foreclosures is on RealtyTrac, a tremendous resource for any real estate investor looking to get into flipping short sales or foreclosures.
As far as the best way to find short sale specialists, its to meet them at REIA meetings or any of your other networking groups you belong to. Another great source is to ask around when you are speaking with your real estate agent to see if they can refer you to a good one.
When you do find a short sale specialist who works in your geographic area, make sure you ask them about their experience, training, as well as what banks they work with and what their average time frame is from time of offer to closing. Obviously, the more experience the short sale specialist has here, usually the better - as the short sale process does involve knowledge of the inner workings of bank departments.
Nonetheless, whether you do it on your own or you use a short sale specialist to find houses to flip, these kinds of house flips are some of the most lucrative ones you will find and well worth the work it takes to locate them.