don t forget that a short sale can still affect your credit score the months of mortgage payments that you missed before the short sale can show up as delinquent payments on your credit report it is up to the bank to decide what to report so it s in your best interest to try to convince the bank not to report your defaulted payments 
your bank may be more likely to be generous in this regard if you brought up your hardship before you were significantly behind short sale strategies for buyers and investorsshort sales can provide excellent opportunities for buyers to get houses at a reduced price here are a couple of tips to help you make smart decisions when considering a short sale property most short sale properties are listed by real estate agents and on real estate websites some listings may not be advertised as short sales so you might have to look for clues within the listing it may be indicated as subject to bank approval 5an experienced real estate agent can make a big difference in terms of finding and closing short sale properties agents who specialize in short sales may hold a short sales and foreclosure resource sfr certification a designation offered by the national association of realtors nar 6holders of this certification have specialized training in short sales and foreclosures qualifying sellers for short sales negotiating with lenders and protecting buyers short sales are complicated time consuming transactions for both the buyer and the seller it can take weeks or months for a lender to approve a short sale and many buyers who submit an offer end up canceling because the process takes too long rules for short sale transactions vary from state to state but the steps normally include if you are buying a house in a short sale with the intention of flipping it the key to a profitable transaction is a good purchase price advantages and disadvantages of a short saleshort sales allow a homeowner to dispose of a property that is losing value although they do not recoup the costs of their mortgage a short sale allows a buyer to escape foreclosure which can be much more damaging to their credit score in some cases the lender may write the remaining debt as a loss thereby reducing the owner s debt burden a short sale also allows the homeowner to reduce the amount of fees they pay when they sell the home in most cases these fees are the obligation of a property owner when they sell the property in a short sale these fees are paid by the lender for buyers the benefits of a short sale are evident they get a discount price on a home from a lender that s motivated to sell the property on the other hand the buyer has to do a lot more homework short sales typically don t come with the same disclosures as a regular sale and it is up to the prospective buyer to identify any problems with a property allows homeowners to dispose of a debt that they are unlikely to repay homeowners have to pay fewer fees than a typical home sale short sales allow buyers to buy property at a discountlenders may write off part of the debt as a loss short sales come with fewer legal disclosures than a typical home sale there is more paperwork involved in a short sale short sales can damage the seller s credit rating but less than a foreclosure mistakes to avoidhomes in a short sale are sold as is without the mandatory seller obligations of a normal real estate sale since short sales do not come with the typical disclosures of a normal house sale it falls on the prospective buyer to inspect the property and identify any faults short sold homes may be in worse conditions than the average home on the market making it all the more important to identify any problems it is also possible that a prospective buyer may not give themselves enough time before closing as mentioned short sales tend to require more work than an average house sale meaning that they may also take longer to close buyers should be careful to make sure they have time to complete the process before the sale closes it s all in the numbersin real estate investing it is said that the money is made in the buy this means that a good purchase price is often the key to a successful deal if you can get a property for a good price you increase the odds of coming out ahead when it comes time to sell if the purchase price is on the high end on the other hand you ll watch your profit margin erode you should be able to buy the property put it in great condition and sell it at a profitable price investors need to be able to turn around and sell the house quickly typically at below market and a good purchase price makes this possible the purchase price is only one important number however you ll have to make some other calculations as well including these costs will vary depending on the property s condition and your plans for it it pays to put in the time and effort to develop a realistic budget as this is one of the figures you ll need to determine if the investment can make money costs to consider include material labor permits inspection fees trash removal storage costs and dumpster rentals a good inspection before making the purchase can alert you to any large expenses such as a cracked foundation faulty wiring or extensive termite damage arv is an estimate of the property s fair market value fmv after any repairs and renovations are made investors look at this number to determine whether a property has profit potential the best way to evaluate a property s arv is to look at comparables comps these are homes that have recently sold in the area typically up to a mile away from the subject property that have similar features in terms of square footage such as the number of bedrooms and bathrooms carrying costs are your expenses for holding onto the property the longer you own the property the more you will spend on carrying costs which include for an investment to be profitable the sum of your costs the purchase price repair and renovation costs and carrying costs must be lower than the arv if your costs are close to or higher than the arv it will be difficult or impossible to make a profit you can determine the potential profit by subtracting the purchase price repair and renovation costs and carrying costs from the arv real estate investors might expect to earn at least a 20 profit on a property some use guidelines to evaluate properties in various housing markets under these guidelines the total investment purchase price repair and renovation costs and carrying costs should not exceed if the arv of a property is 200 000 for example your total investment should be limited to about 160 000 in a rising market 140 000 in a flat market and 120 000 in a market with falling values the various investment levels are used to reduce risk in changing market conditions you can risk more in a rising market because you are more likely to get your arv or better when you sell in a falling market you are less likely to get your arv so your investment should be smaller 