Questions about Pre Forclosures vs. Shortsales
I am an investor just starting to get into the market of purchasing pre forclosed homes. I just wanted to get a few things clarified before I start approaching or sending letters out to distressed home owners. I have a few questions here and will list them all in one post instead of separate ones. Please give answer to any or all of them. Thanks a lot,
Question #1: The reason to purchase a home in default is to make a profit by getting the home at some what less than market value. I am offering the current owner cash and a chance to walk away with little damage to their credit and an option to not lose the home to forclosure and get NOTHING in return. But why would the home owner consider selling to me when they could do a shortsale with their bank and get closer to market value for their home? What am I offering that would not also be available doing a shortsale through the MLS?
Question #2: If I were to make a deal with a distressed homeowner would all transactions be identical to a short sale? Meaning would we need to contact the lender, get the price approved? Would lender order an appraisal or BPO to approve price? Would it take the same amount of time as a standard short sale through MLS?
Question #3: Many homes in preforclosure I am looking at, the owner owes more than the home is worth. In standard short sales the bank forgives the difference. If an owner owes $400,000 on a home that is worth $250,000 would a bank ever accept an offer $230,000? Or should I be searching more for homes where owner actually has some equity?