What is a Short Sale?
Posted on February 17, 2010
Filed Under foreclosure short sale investing |
If you have expended any amount of time lately looking at available homes, you have no doubt observed many properties listed as short sales. The purchase of a property that is valued less than its note is more commonly known as a “short sale.” In today’s market, the choices appear to be limitless in the short sale department. With adjusting rates and a stiffening economy, foreclosures have been on the increase. Therefore, as a buyer, it is the perfect time to allow the market conditions work to your advantage.
Making Quick Work of Finding a Short Sale
It is a smart idea to interview prospective realtors, if you are considering a short sale. There are a few real estate agents who have considerable experience in dealing with short sale properties. For example, the seller’s agent of a short sale should have cultivated a good working relationship with the bank who owns the mortgage. Some realtors are familiar with looking for properties that will be the best deals. Make it understood at the beginning that you are especially interested in a short sale real estate. This will provide your realtor a great place to start his or her hunt.
Home Buyers can Stumble Upon Awesome Deals in Short Sales
Short sales are frequently offered at a minimal price to avoid prolonged exposure of assets for the bank who has the mortgage. Banks lose a great deal of money on a foreclosure at present; short sales allow them to discharge the mortgage without going through the time and expense of a foreclosure. Commonly, you will find the selling price to be attractive, without having to play “tug-of-war” with the seller. With a short sale, the loss of income began happening before the property you see hit the housing market. The owner is trying to sell the real estate to avoid having a foreclosure on his record. Removing the loss from the bank’s financial statement quickly eases added loss in revenue.
What to Expect From the Bank
As you might think, dealing with a lender for a short sale is not nearly as efficient as dealing with home owners. Most of the time, when the bank consents to a purchase offer, a verbal confirmation will be what indicates the beginning of the sale. The bank engages a particular Title Company who handles the title and escrow for the sale. Usually, with a short sale, the only side required to move swiftly is the buyer’s. The Title Company and the Noteholder (Lender) respond slower than in a regular sale as they are not eager to formally lose money. This is also most likely due to the the high workload involved in such a transaction.
The best method to promote a timely closing is to turn in any requested documentation as soon as possible. There may be thirty days or more before your closing date, but do not let that fool you. There are many more things happening in the sales and lending process than you can see. Take into account that you are workin with a Corporation and not a single person. Keep your side of the deal by keeping in step with your lender and the time will whisk by. Soon enough you will be moving into a wonderful home.
Lee Bell
http://www.articlesbase.com/real-estate-articles/what-is-a-short-sale-712922.html
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5 Responses to “What is a Short Sale?”
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What does a short sale do to your credit and do you have to be late in your mortgage to get one?
I am current with my mortgage and have great credit but I need to get out of my home and I owe more than it is worth. I was wondering what a short sale will do to my credit and if you have to be late on your mortgage to even qualify for one. Also, what will it do when I try to buy a new house? Is there any other way to get out of a house quickly? Thanks!
If you make good on the payments you’ll owe the bank the short sale shouldn’t affect your credit rating badly. But the debt you’ll have remaining on that short sale will make it next to impossible to buy a new home until you pay off the short sale loan and save up for a decent down payment so you don’t find yourself upside down again. Something it appears you didn’t learn from your recent experience.
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A short sale will lower your credit score by 100 or more points.
You do need to show a hardship to the lender in order to qualify or get the ok from the lender to short sale your house.
Short sales are NOT a quick way to get out of your house. Banks notoriously will sit on offers for months and sometimes not even approve of any of them in the end, which will send you into foreclosure if you stop paying on the mortgage.
My guess is, if you cannot show a hardship, you are not going to be granted a short sale.
You also would not be buying another house anytime soon with a short sale on your credit report.
Just because you are underwater does not mean you can get out from under your obligation.
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A Short Sale, regardless of whether or not you are late on the mortgage, will appear like a foreclosure on your credit. This will have a serious negative affect on your credit but the number of points it will lower is uncertain because there are many other factors which come into play on determining a person’s FICO score. You will likely have to wait 3 years after the event before you can qualify for another mortgage regardless of your credit score.
References :
http://www.cohomesandloans.com
no, i am
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