A short sale home refers to property that is being sold to prevent foreclosure. In most cases, the homeowner has fallen behind with their mortgage payments and does not possess the financial means to repay the note. Lenders agree to accept less than the borrower owes on their loan as long as certain conditions are met.
Selling a short sale home isn't any different than selling any other type of house. The primary difference is the seller must locate a buyer quickly in order to satisfy conditions set forth by their lender. Borrowers generally need to sell their house within 90 days.
Lenders generally require borrowers to list their property through a realtor. Some banks might recommend realtors who possess experience in short sale transactions. If not, real estate experts recommend seeking out short sale professionals who have a good understanding of the process.
Short sales are complex and complicated. Every lender establishes protocol, but few have a strong grasp on this relatively new phenomenon. Although lenders have engaged in short sales for years, the recent influx of foreclosures has brought the technique to the forefront. Thousands of struggling homeowners now seek out short sale approval on a weekly basis.
Short sale transactions are generally handled through each lender's loss mitigation division. Staff members are known as loss mitigators. Their job is to act as a mediator between banks, borrowers, and buyers. Loss mitigators assist borrowers throughout the short sale process. If borrowers fail to adhere to established guidelines, lenders can commence with foreclosure action.
Some mortgage lenders accept the sale price as payment in full. Other lenders require the borrower to pay the difference between the sale price and loan balance. This can amount to several thousand dollars and will severely impact credit rating.
Banks issue a deficiency judgment when borrowers are unable to pay the difference in full. The judgment is reflected on credit reports and can remain in place for up to seven years after the debt has been fully repaid.
When lenders issue deficiency judgments, borrowers must carefully consider the long-term ramifications. In some cases, it is best to let the house fall into foreclosure. If this occurs, borrowers should attempt to obtain a deed in lieu of foreclosure agreement.
Deed in lieu allows borrowers to give the house back to the lender and walk away from the property. The borrower loses all monies vested into the home and receives no sale proceeds. The bank agrees to accept the amount the house sells for through auction and will not pursue the borrower for the balance. However, some lenders issue deficiency judgments against deed in lieu contracts, so it is crucial to determine protocol before signing a deed in lieu agreement.
Homeowners who need to sell their house quickly to satisfy a short sale agreement should consider working with real estate investors. Many investors are currently seeking out short sale homes because they can be purchased below market value.
Conduct research via the Internet to locate private investors or local real estate investment networking groups. Additionally, check the classifieds in local newspapers and real estate magazines.
It is important to conduct due diligence to ensure investors are legitimate and hold appropriate business licenses. Check with the Better Business Bureau. Ask for references and follow-up with each.