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.