I realize that to the mainstream media and the National Association of Realtors, real estate investors are often seen as vultures but the fact of the matter is real estate investors will play a major role in the recovery of the housing market in many cities.
Right now, many investors are getting involved in short sales. What happens is the investor gets control of the property and then negotiates with the banks who have the mortgages on the property.  They negotiate the debt down and do the best they can to get the debt relieved for the homeowner. This is all legal and all parties involved know what’s going on.
In return for doing the work and creating the short sale, the investor is typically looking to make between 5-10% on the transaction. Often times it may only be 4-8%. The investor actually closes on the property and then immediately resells it to another buyer. The buyer often is buying a home 15-20% under market value so they are getting a great deal. The real estate agents get paid their commissions and the investor makes a spread.
Countrywide now has a policy where they will not sell to a business, but they will sell to an individual. Â Additionally, one of the other items they are doing is making a short sale approval with the condition that they buyer cannot resell the property for 30 days.
The investors are creating value. They are not taking advantage of anyone despite what the various Realtor Associations say. The debtor has no equity so there is no “equity stripping.”  The banks are big buys and they agree to sell at a price…then they try to put conditions on it such as you can’t sell it for 30 days.
This is just more of the same kind of nonsense and duplicitous nature we see from the banks today. They are more than happy to sell their trash paper (commercial paper and mortgage backed securities) to various investors for 40-50-60 cents on the dollar…but oh, that’s right. Those “deals” are going to the Wall Street boys.  The guys on the street who are trying to make an extra 10-20-30k per transaction and are cleaning up the housing market…we can’t have them make any money.
In talking with various investors, Countrywide by far is one of the most difficult mortgage companies to deal with. Perhaps Senator Chris Dodd could make some phone calls to his buddies over there to see if they can back of on their ridiculous requirements.
