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I am new to this. Just started learning. In the North Dallas (Collin County) that I am interested in, the housing price is going up fast and demand is crazy. Houses sell in a matter of day or two if priced right. Yet, there are some foreclosure sales of houses worth $200k+. In this situation, why would any lender agree to a short sale knowing that the house will sell at almost full price (less rehab cost) at auction or they can take it back and dispose it thru their realtor at full price? Does short sale investing still work in this situation? Also, I don't understand why anybody would get into foreclosure to begin with when current value of any house is higher than it has ever been. If the owner borrowed some money in the past based on the lower value of the house in the past, why would that person simply sell the house, which will give them more money than they borrowed in the past and pay off all the debt?
Can somebody be kind to help me to understand?
Thank you in advance.
The key is the value of the existing mortgage(s). There was a lot of crazy lending back in the pre-crash days. 125% loans. Interest only loans. Home equity loans. Even with recent price appreciation, many homes are still under water. In my neighborhood we have a house awaiting approval for a short sale at $285,000. The mortgage was taken out in 2007 for $398,000. There is no way that house was EVER worth more than $320,000 max.
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