Short Sale Real Estate
Short sale real estate is property that has been sold for a lesser amount than the balance due on a mortgage loan. This type of real estate transaction occurs when a homeowner is no longer able to fulfill their mortgage obligation and defaults on their loan. In order to prevent foreclosure, the lender can elect to allow the homeowner to sale the home for less than is owed on the mortgage.
Typically, lenders only engage in short sales on real estate when the current market value is less than the loan on the property. Short sells are only available to homeowners who have no equity in their home and owe more than the real estate is worth.
Short sale real estate transactions require considerable paperwork and preparation on behalf of the homeowner. Oftentimes, the services of a real estate attorney and/or real estate agent are required to complete the deal.
Not all lenders engage in short sale real estate transactions. Those who do accept short sales usually require the homeowner to have a ready buyer and all the paperwork prepared to present to the lender. Additionally, the ready buyer must be prepared to quickly close the transaction.
Prior to placing pre-foreclosure real estate on the market, the homeowner must contact the lender and request a short sale. If the lender agrees, the homeowner must then submit a letter of hardship explaining the circumstances that caused them to default on the loan. As a general rule, lenders only accept short sales when the homeowner is in dire financial straits and market conditions make a short sale the best choice to lessen the lender's damages.
Short sale real estate transactions save the lender the costs associated with foreclosure and the homeowner avoids having a foreclosure on his or her credit report. However, not all short sales allow the homeowner to walk away free and clear.
In some instances, short sales include a deficiency judgment which requires the homeowner to pay the difference between the amount due on the loan and the amount of the short sale. If a home is sold via a short sale for $100,000 and the balance due is $125,000, the homeowner may be responsible for paying the remaining $25,000.
When this occurs, the deficiency judgment is reported to credit bureaus and will remain on the homeowner's credit report for 7 to 10 years. Although deficiency judgments are reflected on credit reports, if payments are being made in a timely fashion it will not be as detrimental as a foreclosure. Therefore, when entering into short sale real estate transactions that include deficiency judgments, it's imperative to be proactive and make payments. Otherwise, the borrower will have derogatory credit for up to a decade.
If you're currently facing foreclosure, you may qualify to sell your house to an investor such as SimonVolkov.com.
To determine if you qualify for a real estate short sale, fill out the https://www.simonvolkov.com/forms/real-estate-notes.html and provide us with information about your situation. One of our qualified consultants will contact you to further discuss your needs.
Published on September 30, 2007 at 10:02 PM | Comments: 1