Real Estate: April 2008 Archives

carnival.jpgWelcome to the Fifteenth Edition of The Carnival of Smarter Investing! We're back with our fifteenth edition of CoSI, so sit back, relax, and enjoy this supersized gathering of featured articles by investors and writers in the areas of business and real estate. And, as always, to submit your article for next week’s edition, you can do so here.
It has been acknowledged that there is indeed an economic downturn occurring or impending in many regions. We are also seeing increasing volatility in the equity and financial markets. Added to this, is the inflationary pressures that are bearing down on investors. Given this situation, many investors are turning to safer investments. In this context, property or real estate is beginning to get much more attention from investors seeking to cushion the effects of inflation. In countries or locations where property prices have leveled off or fallen and the number of foreclosures is rising, investors have a great opportunity to invest their money in a sector that offers better returns.

Short sales are becoming more and more popular as more and more investors learn this creative technique which can create huge profits. A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a short sale. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.

Imagine if you were able to purchase your dream home at a fraction of its market value. The good news is, this is no longer a dream. If you want to get the best deals in the real estate market, the most popular option today is purchasing foreclosed properties. These properties are not only of high quality, they are even sold at less than their market value. This is because these properties are owned by the bank because the homeowner failed to pay for his mortgage. So in order to regain what has been owed to the bank, the bank sells the property at a cheap price, giving buyers a great opportunity to purchase real estate.

When you buy a home with a mortgage you promise to repay the loan and back up that promise in a contract by offering your property as collateral. Default on the loan and the lender can legally reclaim the property in order to offset losses that result from your non-payment. Most Americans think of foreclosure as an auction on the courthouse steps, but in reality the foreclosure process begins long before that happens. The auction is really the last event in a long line of legal steps that are all part of the foreclosure.

About this Archive

This page is a archive of entries in the Real Estate category from April 2008.

Real Estate: March 2008 is the previous archive.

Real Estate: May 2008 is the next archive.

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