As a result, buyers can often get a better deal on the home than if it were purchased through a typical sale. Short selling is a mix for the buyer, seller and lender. A short sale occurs when a seller doesn't receive enough cash from a buyer to pay their mortgages. The seller may have paid or borrowed too much for the property.
The housing market may have fallen, so its fair market value is lower than the current mortgage balance. This may seem like a good deal to the buyer, but these homes are generally sold as is and may take longer than normal to close. During a short sale, homeowners agree to sell a home for less than the amount owed on the mortgage loan. This type of sale requires the lender to approve the agreement.
While short selling sometimes causes sellers to owe money to the lender, they also offer an alternative to foreclosure, Bankrate says. In addition to helping sellers protect their credit, short selling offers a number of benefits to buyers. A short sale, if the owner succeeds in securing it, would be much more beneficial to their personal credit than a foreclosure. A home seller first needs to talk to their lender about the likelihood of selling their home as a short sale.
Buying a home through a short sale is different from buying a property at a foreclosure auction, or one that is actually owned by the bank, known as an REO or real estate property. A short sale is a real estate offer where you really need the help of an experienced agent or lawyer. So, even if you feel like there are a lot of competitive offers on the short sale house you have in mind and you're afraid to deal with the lender, the bottom line is that a short sale should be sold. In a short sale, the seller's agent puts the property up for sale and picks up the seller's “hardship” package, which includes bank statements, information about the loan and a letter of difficult living conditions explaining why he had to make a short sale.
Check your state's laws that cover the foreclosure reporting process to find out exactly where to look for unlisted properties that may be subject to short sale. Short selling transactions can also be initiated by an anxious buyer who makes a below-mortgage offer to a troubled homeowner. In some cases, the borrower may even make a short sale if the lender has already started the foreclosure process, depending on the financial situation. If, on the other hand, the source of your financial problems is something that exists since your mortgage and was not disclosed during your loan application, the lender is much less likely to accept a short sale.
A short sale is when a mortgage lender agrees to accept a lower mortgage payment amount than is due to facilitate the sale of the property by a homeowner with financial difficulties. There is little incentive for a seller to cooperate with a short sale once they discover the negative effect it has on their credit. An advertiser who advertises a short sale but has never closed a short sale is a risky proposition for you, since it is the publicly traded agent who must present the short sale package to the lender and negotiate. A lender may request a higher price, at market type, for a property, either in foreclosure or in a different short sale offer.
So, if you're looking for a new home, there's a good chance you'll fall in love with a house listed for short sale. While a short sale requires the bank to agree to sell the house for less than the value of the current loan, short selling usually represents the most cost-effective option for the bank. Because they already have a lot of their information in the short sale documentation, they may be able to speed up the loan application process. .