Buying U.S. Short Sales…Can Canadians Participate?
Canadians have been looking alot at the MLS in the US lately. “Buy U.S. short sales at incredibly low prices!” More often than not however, you are not looking at realistic prices and the procedure is much more labour intensive than you will be led to believe. Those prices are a lure created by realtors to influence unknowing investors. Let’s get to the bottom of this over used sales strategy that many US realtors are using on us poor unsuspecting Canadian investors.
Credentials…who needs them?
To begin, lets look at the credentials of who you could be talking to on the other end of that ling distance call. In the boom, everyone and their dog took a weekend course and became a realtor. Seriously! At that time realtors didn’t have to do much work for a sale because everything was selling and everyone was getting mortgage approvals. Since the meltdown things are different…much different.
With fewer homes selling in a different economy, the realtors that have stayed in the business now have to get more creative and do alot more work to achieve a sale. One of these tactics is doing short sale listings. Since short sales have not existed in Canada since 1962, you may not be familiar with the process.
What is a Short Sale?
Buying a U.S. short sale happens when you or a realtor go to an owner of real estate (who is underwater or behind on their mortgage) and offer less than what the owner owes to the bank. So the proceeds from the sale fall “short” of the outstanding loan and the owner must “negotiate” with the bank to be released from the loan at the amount offered. The bank must weigh the fact that if they (the bank) take over this property in a foreclosure process, they will have to incur legal costs of the procedure, begin paying property taxes, HOA fees, insurance, utilities and may also have repairs to get it ready for sale. Plus, the value of the home may have come down significantly, so it is potentially a major losing venture for them. If they do the short sale, they are in a sense cutting their losses, however the reality is less than one in 10 short sales close and the process can take from 3 months to over a year!
It is very common practice to advertise prices to unknowing Canadians on the MLS, because they often result in multiple offer situations where in most cases, if the offer does get accepted by the bank, the purchaser in most cases has not a good deal on the price and has also accepted the property “as is” with no warranties. This can be the beginning of a nightmare.
When buying U.S. short sales as a Canadian, you are best to work with fellow Canadians that can get you good prices on properties that have great cash flow and ROI, with clean title, fully repaired and tenanted (if required) in good areas with incredible upside potential. Your investment experience must be easy, profitable and allow you to sleep at night…that’s where we come in.
To find out how you can learn more about purchasing in the US, please email me at info@propertyprophets.ca.
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Buying U.S. Short Sales
