Understanding Short Sales

In these tough economic times, many homeowners find themselves in precarious situations with regard to mortgage debt. The loss of a job can certainly destroy the ability to make mortgage payments for many, and the short sale is one solution to selling a home that can no longer be maintained financially. A short sale is essentially when a lender (the bank or mortgage company) accepts less than what is owed on the home. However, this is not always an option. If a home is in tip-top, move-in condition inside and out, the homeowner has a good chance of opting for a short sale. This does not guarantee, however, that either seller or a lender will accept a short sale. Often, it makes more sense for a lender to foreclose. A house in excellent condition will command a higher dollar and both the lender and seller know this. When the seller is many months behind in house payments and is unable to catch up, they are often forced into a short sale situation. The lender has the option of selling at either market value or as a short sale.

When in question, a potential buyer should seek counsel as well as financial advice from a qualified accountant when considering the purchase of a short-sale investment. A realtor will help you get through the maze of short-sale terms. In many cases, it's a "buyer beware" market, but you can avoid most of the pitfalls. You and your realtor are the key to a successful short sale. A short sale can be a great opportunity for a buyer who is not in a hurry to purchase a home. Often, it takes considerably longer to purchase a property via short sale, and there is no guarantee that the lender will follow through with a buyer. The lender can accept other (usually higher) offers months into a contract placing a current offer in jeopardy. However, in today's economy, a short sale is still an excellent choice for purchasing a second home, an investment property, or a fixer-upper to be re-sold. Opportunities abound for a buyer looking into a short sale.

When a person has found a short sale they wish to purchase, it is important to contact the lender as soon as possible. Your real estate agent can handle this for you. Remember, this is not the same as purchasing a home from a seller who just wants to move. First, you'll want to find out whether there are other offers pending. Then, you will need an estimated closing statement. This will show the sale price you expect to pay and all the costs of the sale and any other fees that you would be required to pay. Make sure there are no liens on the property. Your real estate agent will prepare this for you. You can also have your lawyer present at closing or have them review the closing papers.

As a final note, if the seller is to receive cash from the sale, then this is probably not a short sale. Your realtor will be available for any questions you may have.

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com