Alrighty… so we’ve all been hearing a ton about the top cities in the country with the most foreclosures… but what about the other side of that coin?
What about the cities that are the best for short sales in the country?
And by “best”… I mean the real estate markets that are very short sale friendly.
We ran across an article on RealtyTrac this week which is were we got the data for this article.
The way they measured the “best” cities for short sales is by taking into consideration…
- Total # of short sales closed during the quarter
- Total % discount
- Time to close a short sale
- The % rise in short sales closed from the previous quarter
So…. drumroll please… here ya go!
10 Best Cities For Short Sales For Investors In April – June 2011
- Los Angeles, California – 9,145 short sales closed with average of a 32% discount
- Phoenix, Arizona – 8,434 short sales closed with average discount of 27%
- Cape Coral / Fort Meyers, Florida – 1,358 short sales closed with average of a 33% discount
- Thousand Oaks / Ventura, California – 681 short sales closed with average of 26% discount
- Reno / Sparks, Nevada – 702 short sales closed (a 50% increase from Q1 2011)
- San Francisco, California – 3,237 closed with average of 41% discount
- San Jose, California – Whopping 41% average discount
- Portland, Oregon (my city 🙂 – 756 closed (up 39% from Q1 2011)
- Atlanta, Georgia – 2,595 closed
- Milwaukee – 324 closed with a 41% discount below comparable properties not in foreclosure
What This Means
Beyond just being cool data to look at… what can you as a real estate investor do with this information?
Well… at least 2 things:
- The Obvious: Look at those markets and develop relationships in those areas with banks, realtors, etc. to get your foot in those markets to start working on some short sales. There are a lot of investors looking to do short sales so there is likely a good bit of competition… but as you see, there is plenty of deals to go around for everyone.
- The Overlooked: As with any business or trend… there are “by-products” that often get overlooked… very profitable by-products. With a market that is closing a lot of short sales… there are bound to be a lot of short sales that sit on the sidelines 80% done… dead on the vine… because the bank won’t accept the offer from the investor. And sometimes, these deals are far enough along where there is already a buyer in place… but the bank won’t budge. This lies an opportunity to potentially add a new revenue stream to your investing business.
The New Potential Lead / Revenue Stream For Investors In Hot Short Sale Markets
An investor friend of mine from Phoenix (city #2 on the list above) had mentioned a little while back that he kept falling onto short sales that had stalled for one reason or another.
Some short sales were handled by investors or real estate agents who didn’t know what they were doing… some short sales were stalled by the banks because they didn’t want to accept offers that were made (but for some reason they’d rather let it go to foreclosure, buy it back, and hold it for 2 years to sell… hmmm.)… and some of these deals were so far along people were almost abandoning them to go to the foreclosure auction.
So, the opportunity this investor saw was… there are a certain % of these short sale deals that were so far along… they had a buyer in place… that if he could just find a way to get the bank what they wanted… he could step in and help everyone win in the transaction so the deal wouldn’t be “dead on the vine”.
One way he found to do it on some of those “dead” short sales that already had a buyer lined up was to go buy those properties at the courthouse steps (knowing what the buyer was willing to pay for the house)… then selling or assigning the property over to that buyer for a quick and tidy profit.
Everyone wins.
– The bank wins because they sell the property for a price they can stomache (even though they could have done that before it hit the courthouse steps).
– The buyer wins because they get the house they wanted at the price they wanted to pay.
– The agent wins because they get their commission on the end buyers purchase.
– And the investor (you) wins because you helped them all put the transaction together w/ a little creativity… and collected a fee in the process.
My buddy called it a “reverse short sale“.
Is it revolutionary? NO
Is it a “get rich quick” method where there’s no work? NO
Is there very little competition on these types of “dead” short sales? YES.
If you’re interested in learning a bit more about the process for doing a “reverse short sale” as he calls it… there is a video online that will be worth the 15 or so minutes it’ll take to sit down and watch right now.
>> Click To Watch The Video From The Phoenix Investor About The Reverse Short Sale Process <<
Either way, the stats in this article are a good departure from the normal “foreclosure” centric stats we’re all used to. Showing the number of foreclosures in a market is a bit misleading because that just shows the inventory… the # of potential properties that are in the deal “pool” for any one market.
But, showing the cities where short sales are actually being closed… and closed well w/ high discounts, large numbers, and trending upward means that banks are more and more willing in those areas to work with 3rd party investors to get those properties / notes off their books and move on.
So, get out there and look at both opportunities these markets present to short sale investors… both from the traditional short sale side of things and the “reverse short sale” side where investors can grab the “dead” short sales and turn them into “base hit” deals to add to the monthly cashflow and profits.
Until next time!
– REIbrain
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