Huge decline in home sales to Investors

An article on CNN Money I read today explains that the sales of homes to investors have declined more than half over the past five years. The article also states the number of investors who are flipping properties has fallen even faster. ( Please read the below link for more details)




With a majority of the homes for sale on the market being short sales I can see why the number of investor sales have declined. I have a lot of phone calls from agents who want to put offers in on my listings and they are typically 70 % or more BELOW what the bank wants to net. All cash offers with the assumption the investor can close quickly is not as favorable as it may have been at one time.



There are alot of factors the lender will take into consideration when approving a short sale as we have discussed before and they are as follows:



1. Was the property marketed for a substantial amount of time?



2. Is the home owner a true candidate for a short sale?



3. How much of a loss is the lender going to take on the transaction?



Investors need to drive the price down for the transaction to pencil out for them at the end of the day and the lender is trying to net as much as possible to minimize their loss. You can see how this can pose as a problem. Now, lets add the flippers. We are all aware that lenders are not fond of flippers in a short sale. There are also alot of legal issues attached to flipping.



I can appreciate investors looking for deals but the bottom line is if we want to get a lender to approve a short sale we are going to have to slow down and have a strategic and ethical plan in place to get the lender to play ball. The goal is to bring the seller, buyer and lender together and create a win win situation. It has been my experience that investor offers are not very effective in achieving that goal.



Here is a scenario I would like you to consider:



I had a call today from an investor out of state who has not viewed my property but would like me to write up his offer significantly less than what it is listed at. My listing is at a good price that will cause it to sell with no problem. Here is the issue; I have 3 liens I have to satisfy with the lenders. I have a strong listing history on the property, a qualified candidate for a short sale and buyers willing to pay list price. Though it sounds nice to double end a deal, I am not going to try to drive the price down with the knowledge that I have on this transaction. My duty is to help my seller avoid foreclosure and show the bank that I have done my due diligence. If I went down that road I could open myself up to alot of legal issues and potentially lose my license not to mention the respect of my client. What would you do?



The problem is this is happening with investors all day long. This is just one scenario. It is not a situation to take lightly when you have this type of responsibility on your hands.



I believe there are certain situations in a short sale where an investor offer would be helpful. Here are two circumstances:tor offers can be useful for the following 2 circumstances:



1. Your property is a condo with the following issues:



a) Low occupancy rate



b) The building is in litigation



c) Flood issues



In this case it would be hard to get a lender to lend money with these types of issues and a cash offer would be the only option.



2. Any property that has insurmountable damages such as foundation issues.



These are the only two reasons I would accept an investor offer on one of my short sale listings and typically it is after I have created a strong listing history to submit with the offer.



As the market changes I feel we must change with it with ease and grace to do the best we can for all parties involved. One deal at a time.


(Quote) It is through cooperation, rather than conflict, that your greatest successes will be derived.
- Ralph Charell


http://money.cnn.com/2011/09/29/real_estate/flip_this_house/index.htm



"Lotus Realty Group is hiring REALTORS. For more information please give me a call."



REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?



Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.

LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS



At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...


400 S. Sierra Ave. Ste.102 Solana Beach, CA 92075
858-764-7300
http://www.lotusrealtygroup.com