Dean Graziosi

A short sale occurs, when the proceeds from the sale of real estate falls short of the balance owed on the property in question. A short sale is the result of a borrower not making the payments on their mortgage loan. Instead of foreclosing the property, the lender decides that selling the property at a slight loss will be more productive than trying to get the funds out of the original borrower. Both parties must consent to the short sale for it be legal. The borrower is usually in the circumstances to strongly agree on the short sale, rather than have a foreclosure on his or her credit.

 

A Short Sale Kit

Short sale kits are available all over the web. Just  search it, and thousands will pop up. The cheapest tricks are never the best, if you decide to buy one of these kits, keep that in mind.

 

Short sales and the “Lucky”

Most banks and mortgage companies have a department called loss mitigation. This is the department responsible for tracking figures  for the companies short sales. On a normal everyday circumstance, banks will refuse a short sale offer until the borrower has attained notice of default status. Luckily, or not so luckily, due to the massive real estate losses nation wide banks have become more willing to accept short sale offers.

For the lucky borrowers, if you can consider up-side down mortgage holders such a thing, they can offer a short sale before the official notice of default is applied. For those unfortunate borrowers, it is a much needed answer to a desperate question.

For the unlucky, the lenders and mortgage companies who are actually getting the short end of the stick all around, they are stuck losing money on their investment in the borrower. Believe it or not, the bank is invested in you, just as much as you are invested in you property.

 

The Credit Impact of a Short Sale

A short sale does have a negative impact on the individuals credit, though not as bad as a foreclosure. The reason behind this, is that short sales are considered a type of settlement, not a legal seizure of property. The borrowers credit is, usually, back within borrowing standards within five years. For a foreclosure, the proper repair to his or her credit standing can take closer to a decade.

 

Buying A Short Sale

A short sale purchase can get very complicated. Every mortgage company carries their own rules, short sale kits, and mitigation techniques. Don’t be caught off guard  when buying a short sale, there will probably be multiple levels and layers of paper work and approvals to deal with, depending on the mortgage company you choose.

 

So, as a realtor, what’s the bottom line in dealing with short sales? Get familiar with one mortgage company. Going from company to company will only complicate your life and business. Getting good at short sales is a lot like becoming a good swimmer. You have to jump in and start kicking.

 

 

 

 

 

 

 

 

 

 

 

 

http://www.shortsalesinsider.com/short_sales.php

When the lender agrees to accept an amount lesser than the mortgage amount, a short sale has been created.  Short sales often occur when the subject property is in the pre-foreclosure stage but these transactions can occur at other times.  With one of every 355 homes in the United States currently in the foreclosure system, more short sales are taking place than at any time in history.

 

Concluding a short sale does not necessarily alleviate the burden of the obligation from the seller, but usually this is negotiated between the seller and the lien holder.  Debt forgiveness can lead to complicated tax matters on the seller’s side so an accountant should be consulted.

 

In the ideal short sale here are the five necessary steps:

 

·                     The seller signs a listing agreement with a real estate agent.  The agreement to sell is contingent upon approval by a third party. 

 

·                     The agent finds a buyer and secures a contract for the purchase and sale of real estate.

 

·                     The seller accepts the offer contingent upon third party approval.

 

·                     The offer is submitted to the seller’s lender who accepts the buyer’s offer.

 

·                     The transaction closes when the buyer delivers the funds and the existing lender releases the line and the seller delivers the deed.

 

Ah, were short sales just that easy!

 

The buyer should understand that lenders are taking a loss.  These lenders will not bear many of the standard expenses a conventional seller might bear.  As such, the buyer is expected to buy the property in “as is” condition.

 

The buyer should perform all inspections prior to validating the purchase and sale agreement.  This includes pest, roof, sewer and water, plumbing, electrical, chimney, septic and fireplace inspections.  The old adage “let the buyer beware” definitely applies to short sales.  Buyers need to protect themselves with strong contingency language regarding these inspections.  Investors avoid surprises by having a certified home inspector on their short sale team.

Just three years ago, the terms short sale and foreclosure were almost non-existent in the real estate market.  Today, these two solutions for troubled homeowners are everyday terms that describe everyday occurrences.  Today’s real estate market is truly unique in that the slump is national in scope and affects homeowners at every income level.

 

The fact is that more than 50 percent of today’s transactions are distressed sales.  One in five homeowners would be facing a short sale if they were forced to sell at this time.  One in every seven residences has experienced some form of mortgage delinquency in the past twelve months.  More than one million homes will be re-possessed by the end of 2010.  Worse yet, more than nine million homes will receive foreclosure notices by the end of 2012.

 

Some homeowners are making strategic decisions to allow foreclosure. Many others are entering into short sales.  The weight of a foreclosure is hard to get out from beneath.  Today, sellers can have the credit damage of a short sale behind them in two years.  Distressed homeowners that opt to absorb the short sale are in much better credit positions than those that choose foreclosure.

 

With the assistance that is on the table from HUD and organizations like the Neighborhood Assistance Corporation of America, homeowners have choices.  It has never been easier to favorably modify a loan.

 

If modification will not work, concluding a short sale is easier than ever.  The National Association of Realtors has made short sale instruction an integral part of the real estate agent’s training.  The progress in putting short sales together has been remarkable.  When distressed sellers really know their options, foreclosure is the resort of last choice.

 

The good news for the short seller is that lenders are more receptive to short sales than in the past.  These lenders are not in the real estate management business and for the lender foreclosure is far more expensive than a short sale.  Distressed homeowners who are unable to procure a modification should be aggressive about finding a short sale buyer.  Take the emotion away from the transaction and focus on the future.  Conclude the short sale today and in two years the seller will be back in the marketplace.