Archives for December 2010

What is a Short Sale?

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You may have heard the term “short sale” and wondered what it referred to – and what kind of opportunities these types of transactions offer in the real estate market. Let’s define a short sale first.

A short sale can occur when a home owner’s debt on a property is greater than the amount for which the property can be sold. The result – lenders are sometimes willing to accept less than the total amount due on the house if the economic situation dictates such an action.

Here’s where the term “short sale” came from: Assume a homeowner has an unpaid loan balance of $200,000, but the property will only sell for $150,000. The lender accepts that $150,000 as full payment. This is “short” of the full $200,000 amount.

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Diversification in Real Estate

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You normally hear the term “diversification” from financial planners and stock brokers. But you don’t hear the term used so often when it comes to real estate investing. The goal of diversification, regardless of the investment, is to reduce the investor’s overall risk.

Diversification in real estate is easily achieved by purchasing income-producing properties in different markets around the country. In some cases, investors even purchase property in other countries. By creating a real estate portfolio of income-producing properties across multiple and separate markets, they reduce their exposure to risk.

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