Short Sale Real Estate Investor
Short sale real estate is property that has been sold for a lesser amount than the balance due on a mortgage note. 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 stop foreclosure, the lender can elect to allow the homeowner to sell the home for less than is owed on the loan.
Typically, lenders only engage in short sale real estate when the current market value is less than the loan on the property. Short sales are only available to homeowners who have no equity in their home and owe more than the property is worth.
Short sale approval requires 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 usually require homeowners to have a qualified buyer and necessary paperwork prepared to present to the mortgage lender. Additionally, the buyer must be prepared to close the transaction quickly.
Prior to placing pre-foreclosure real estate on the market, homeowners must contact the lender and request a short sale. If the lender agrees, the homeowner must submit a short sale hardship letter explaining the circumstances that caused them to default on the loan.
As a general rule, lenders only accept short sales when homeowners are 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 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 mortgage note 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 might qualify to sell your house to an investor such as Simon Volkov. To determine if you qualify for a real estate short sale, fill out the "we buy houses" form and provide us with information about your situation. Upon receipt of your information, Simon will contact you within 48 hours to discuss your options.
Published on June 05, 2009 at 02:15 AM | Comments: 1
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