How to Do a Short Sale

A short sale, or flip, seems simple enough when you watch a television program or read of other people’s success. Flipping a home can be simple if you know what you’re doing and the real estate markets support you. But short sales can be risky at the best of times. Here’s how to do a short sale.

Find a Market

Before you even think about a home, you must first find a housing market with conditions accommodating to a short sale. Area such as California have seem home prices rise dramatically in almost all areas, especially for homes that have been updated. Rising home prices and high levels of demand are ideal for a short sale. Be sure you’ve found a neighborhood where fixing up a home will bring you profits, not be lost in the sale process if the upgrades don’t add the right balance of value to the home for the area.

Find the Right Home

Look within your selected market for a home that is in need of updating but that doesn’t have expensive necessary repairs such as roofing or foundation work. Redoing a kitchen and updating fixtures is one thing, but repairing termite and water damage is another. Find a home that seems to be behind its neighbors. By bringing that home up to date, it should make it more valuable if the entire neighborhood is increasing in value.

Find a Cheap Home Loan

When you’re doing a short sale, you’re not interested in building equity over time. You want to mortgage the house for as little as possible for the six months to a year that you’ll be holding it. California mortgage options include interest only and short-term variable rate loans ideally suited for this purpose.

Complete Home Upgrades

To maximize profits, you must complete repairs as quickly as possible without spending an arm and a leg. Find a good general contractor if you’re too busy or inexperienced to act as your own and keep the workers coming. The longer it takes to sell, the more profit is lost. Upgrade areas that are obviously in need of updating, but focus your attention on areas that make a substantial impact such as kitchens, bathrooms, flooring and the living areas.

Sell Your Home!

Sell the home as quickly as you can. Short sales can take as little as a few weeks or might take up to a year. The moment your house is presentable, put it back on the market. Stage it well and work on curb appeal to sell it quickly. Every month it sits, you’re losing money in mortgage payments, so be flexible in your sale price – price it to sell, not necessarily to maximize profit. Waiting three months to sell $10,000 higher might net you nothing if you paid as much in mortgage payments during that time.

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