Are Short Sales A good Idea?

[Christian Rodriguez]

Hello Everyone, I just had a question to all of you that I've been a bit torn about. I have heard on a bigger pockets podcast with J. Scott about how one should try to avoid short sales being that we are at a peak in the market. I've also heard this from one of my investor friends and an agent as well. They all say it is due to the length that short sales take to close, if they even close. On the other hand I've heard short sales are the way to go for better profit margins and so forth. So which would you guys recommend? Avoid short sales due to the risk of a potential shift in the market? Or still attempt to go for short sales? Any insight or recommendations help!

[Mitch Messer]

Hi @Christian Rodriguez! It depends entirely on the strength of your local real estate market.

Short sales nearly always involve a fair amount of time and paperwork. And, banks will generally be more willing to accept a short sale (i.e., take less than what they are owed) when the alternative (i.e., foreclosure) is less attractive.

But, in a strong real estate market (in which properties are selling quickly), there's very little incentive for a bank to accept a short sale. So if that describes your market, then I wouldn't bother with short sales.