A short sale takes place if a property or home is sold and the sales proceeds do not entirely pay off the mortgage loan or loans on the residence and one or more loan providers agree to a discounted pay off and permit the purchase to close escrow. This means the lender(s) agrees to discharge the lien that is secured to the property or home upon receipt of less money than is really due.
As foreclosure rates hit record levels, more sellers are resorting to short sales as a way to avoid foreclosure, and recently more banks are saying yes to the short sales. The explanation for this is that the short sale will not impact the seller’s credit as badly as a foreclosure and the short sale can certainly be less costly for the bank. Any time a bank takes a residence back, it costs them thousands of of dollars to process the foreclosure and the amount of time it takes them to get the property back on the market may be as long as six months. For the duration of this period, the market value of the home can continue to decline and the carrying costs involved with having the property or home in inventory prevents the bank from having the ability to lend that sum of money-lenders aren’t in the business of owning real estate, they are in the business of loaning money.
Sounds good right? Well, sellers should know that a short sale will have an effect on their credit, although not as much as a foreclosure. You’ll want to speak with a tax lawyer to figure out the best option. Additionally, lenders might only consent to a short sale if the seller is several payments behind and has received a default notice. This is not always the situation, and we are by no means telling you to stop making your loan payment. If the short sale passes through, however, then the benefits can include your loan company agreeing to the discounted payoff and you being free and clear, you have no out of pocket costs as the financial institution pays all sales fees, your personal credit record is shielded from a foreclosure, and you will be able to move forward with your life without having the stress of the mortgage you were not able to pay for.
We do encourage you to exhaust all other options available before pursuing a short sale. Many of these options can result in you keeping your house. Your options can include things like renegotiating the terms of the existing loan or loans, refinancing the house with a different financial institution, and talking to a consumer credit counseling service if your other debt is barring you from making your home loan payment.
For buyers, short sales offer an opportunity to get a great property at a relative discount. Many agents in today’s market refuse to show short sale listings to their clientele because of the uncertainness involved. So this leads to less competition when making an offer lowering the chance that the price gets bid up.
Another advantage of short sales when compare to buying bank owned properties is that you are buying the home from the previous owner. So the disclosure period which is standard for the normal real estate transactions will apply. This will enable the buyer to question the current owner about the property. In bank owned sales, the seller is a bank who has hundreds if not thousands of houses on their books and all they know about them is how much money they are losing on them. They have no idea if a tree fell on the home last year or if the basement floods in a storm.
There are no guarantees for either the buyer or seller in a short sale. Normally the dialogue with the lender(s) can only commence when an offer is obtained, and the financial institution may or may not agree to it. For the buyer, a great deal of perseverance will be required after submitting your offer as the lender(s) approval process may take a month or more.
Virtually every step in the Short Sale process calls for experience and expertise if the preferred result is to be attained. When it comes to working with a Buyer to find the right Short Sale property experience is crucial in determining the possibility of the Short Sale file – will the file be approved? A specialist who works with Buyers and Sellers to put mutually advantageous Short Sales transactions together is essential. Find someone who gets Short Sale properties sold for Sellers and who gets Buyers to find the right Short Sale property, and who gets Short Sale files approved by mortgage lenders.
If you’re in the market for Folsom Homes For Sale, then you might want to consider purchasing a Folsom Short Sale property.
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