Why is an economic downturn a good time to wholesale real estate?

As with any period of economic downturn, there comes a wave of financial “hard times” for many homeowners. These difficult times cause an increase in foreclosure rates that are the result of many homeowners no longer being able to keep up with their mortgage payments.

Lenders in tough economic times are forced to foreclose on delinquent borrowers and will repossess thousands of properties they actually do NOT want to keep as bank property inventory. Banks will often offload these properties to real estate investors at dramatically reduced payment amounts. These properties are purchased and then immediately resold at a profit by real estate wholesalers. This style of investing is called “shorting.”

In addition to banks filling up on bank-owned or REO (real estate ownership) inventories, wholesalers will also see a huge increase in “private sellers” slashing their home prices in an attempt to avoid any trouble. foreclosure that may be heading your way!

A recession will usually cause a wave of both “private” and “bank-owned” real estate to flood the market at the same time. This sudden influx of available real estate inventory will kick off a serious “Buyers Market” situation. Sellers who are in some kind of crisis and need to sell VERY FAST are forced to sell their homes at deep discounts just to avoid losing their homes to the bank in a foreclosure situation. It’s a vicious cycle that snowballs as the recession worsens. Welcome to “2009”!

Experienced wholesalers find it very easy to find incredible deals in these HOT “Buyers” markets. Many people believe that wholesalers are simply “taking advantage of the misfortunes of others”, and some people will conclude that wholesalers are somehow evil! I see it completely differently, while I believe that wholesalers are doing justice to both Banks and Private Sellers. The wholesalers are buying up all the dead weight from the banks and helping the banks “cut their losses” and are keeping thousands of private homeowners from going into foreclosure and possibly even bankruptcy.

Simply put, inventory of great-priced real estate is plentiful in times of recession, making it the perfect time for savvy wholesalers to make a ton of quick bucks. Boo!

Learn more about wholesale homes, visit: www.WholesalerSmarts.com

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