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Are Short Sale Investors Dead?

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In a horrible move, our local government has put more regulation on the real estate industry.  They have put regulation on a part of the business that has been humming along now for years and that has helped several banks and homeowners out of a bad deal.  What I am talking about is Short Sales.

Short Sale investors usually flip their deals to other investors or homeowners at a discounted price and make a little money by going through a horrible long and drawn out process of negotiating with banks.  Their money is well deserved and they employ a lot of people both here and nationwide.  There is a lot of paper pushing and it is always not a done deal.  Sometimes the bank just forecloses and takes the house back.

Because of the time and risk involved, Short Sale Investors make good money on some deals.  Sometimes over $20,000 to $30,000 on one deal.  That is well deserved if you have ever tried to short sale real estate.

Now here in Colorado, and probably soon to be in other states, the short sale investor needs to disclose how much he/she is going to make on each transaction.  This is only the case with a double close which is the way that most of them work their business.  They have to disclose to both the seller, the sellers lender, the buyer and the buyers lender how much they are making.  This will for sure start to blow up several short sales because everyone will think the short sale investor is making too much and they want that money.  Or the bank wants to keep that money.  Or maybe both sides just see another opportunity to negotiate.

Lets compare this new law to buying a car at a great deal.  Lets just pretend I bought a Honda at half price at $5,000.  I made a great deal!  Instead of using this care myself I decide to resell this car at $10,000 (which is my right anyway).  Do I have to disclose to my seller that I am going to make $5,000?  NO!  Do I have to disclose to my buyer that I purchased this car at $5,000?  NO!  Do you see the disadvantage I would have if I had to do so?  They would beat me up on my price or want me to pay more, don't you think?

Whatever the case may be, I just think these new regulations will slow everything down and mess up a lot of deals.  For some reason some people in government think that it is not ok for investors to make any money.  It is this investors opinion that these changes are just not American.

See the more on the regulations here: Short Sale Changes



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