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Nov 25

Debunking the Myth on Short Sales

Since the home bust in 2007 the real estate market has been in a flux. Many home owners had to watch in trepidation as foreclosures loomed without any way out of it. However, most property owners are now using short sales as an exit strategy and as an investor; this might be your way of owning property at favourable prices. If you are looking for property in the real estate market, you might have noticed that the hitherto popular properties with equity are very few today and it is thus imperative to get a few ideas on short sales in order to enjoy the apparent benefits.
In the simplest terms, a short sale is an agreement between a lender and the current owner of a home to accept an amount lower than what is owed to pay off the money. It is different from a foreclosure because if your property is foreclosed by a bank, then it will already be repossessed and sold and you will still be pursued for the deficiency on your mortgage repayments. To get a short sale on a property, the owner will have fallen several months back in payment and though it sounds very applicable on paper, it is a very complicated process.

To instigate the process, the investor will have to find a bank officer with authority to accept a discount. This is the loss mitigation rep.  This is obviously easier said than done and involves calling the loss mitigation department of your bank and before they accept your offer, it might still take time. For the lender, short sales help in saving costs associated with the complicated process of foreclosure including attorney fees among others.

If you are a suave investor, then you can buy a short sale from the lender and with the agreement of the homeowner. There are many misconceptions about these properties out there but you need to get the right information in order to succeed in the market. As a buyer, you will obviously get a bargain once the complicated process is over. The waiting time is the only hurdle and as long as you are patient, then you can recoup your money or even have a home which people can pay anything for.

The lender is interested in the property’s information and the kind of deal you have agreed with the homeowner. The property will have to be evaluated again, but you can also include your own appraisal as a form of the aiding this transaction. For the homeowner, the lender will still go in-depth and try to ascertain whether they are really broke or if there is any benefit they want to accrue from the short sale. This means a signed contract must be presented to the lender to ascertain there is nothing fishy going on. Short sales might not be the most popular ways of buying property but with careful assessment of property and availability of considerate lenders, you will soon have the best property the market has to offer.

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