You are here: Home » What is a Short Sale In Real Estate?

What is a Short Sale In Real Estate?

What is a short sale in real estate

What is a short sale in real estate?

A short sale in real estate is when the bank takes a short or discount on the original mortgage note in exchange for a quick, cash sale.  By discounting the note, the bank will create equity in an otherwise unattractive property and an investor or new home buyer will then be able to purchase an otherwise unobtainable property. The process of a short sale in real estate takes a great deal of time and effort from both the bank and from the REALTOR or investor working on the short sale, as they have to negotiate to determine the amount of discount that will be taken on the note.

What is a Short Sale In Real Estate? |Why would a homeowner want to do a short sale?

 

Homeowners that are behind in payments, have a house in need of repairs that they cannot afford to fix, or homeowners that owe more on the house than it is worth (the home is underwater) are the best candidates for a short sale.  If the current economic condition of the house match the criterion listed above, then a short sale in real estate will be the only way to sell a house without going into foreclosure.   A short sale is a better alternative than declaring bankruptcy and having their homes foreclosed on. The consequences of these two options can many times lead to lawsuits, ruining of credit, and even IRS problems. A short sale performed correctly by a real estate professional can alleviate a great deal of the stress and pressure caused by this situation, eliminate the lawsuits, and reduce any tax consequences.

 

What is a Short Sale In Real Estate? | Who benefits from a short sale?

 

A successfully negotiated short sale in real estate is a win-win-win for the homeowner, the bank, and the REALTOR or investor performing the short sale. The real estate professional will be able to create a profitable transaction. The homeowner going through the short sale is able to relieve themselves of the burden of the home without having to deal with a foreclosure, deficiency judgments, and even tax consequences. While their credit will be damaged and treated as a foreclosure initially, the homeowner will be able to improve their credit much quicker than if they had actually been foreclosed upon. In fact, according to FHA guidelines, a homeowner who has had a short sale on their credit report is eligible for consideration for an FHA home loan in as little as 2 years, provided they have steady income and have a history of paying their debt since the short sale occurred. The bank wins because they will be able to write off the bad debt (the home), accept a cash payment in return for the non performing asset, and release their interest in the property. Remember: Banks are in the business of loaning money, not in managing property.

What is a Short Sale In Real Estate? |Who do you go to, to do a short sale?

 

Learn How I'm Making TONS Of Money With My AMPS Investment Strategy!

My 100% FREE video training series shows you the Investment Strategy that I use to Make Money with "worthless leads that have no equity... Basically How to Sell Un-Sellable Houses to Un-Loanable Buyers." You owe it to yourself to check this out!
 

 

 

When searching for a real estate professional to do a short sale for you you should look for an experienced professional that have completed several short sales. Short sales are tricky by nature, every bank has different rules and processes for completing a short sale so you will want to use a real estate professional that has experience. Remember, not every Realtor understands the short sales process. More times than not, you will have success working with investors who are going to negotiate and purchase the property directly from the banks rather than REALTORS who will just list the property.  I have many years of experience with short sales and have completed well over 1000 short sale transactions over the last several years.  Feel free to contact me and my office if you would like to discuss your situation.

What is a Short Sale In Real Estate? | Short Sale Final Note

 

In conclusion, there are many homeowners who are behind in payments right now due to decreased income or increased expenses, adjustable rate mortgages that have risen, or owe more on their home than they are actually worth.  Don’t feel like you are alone. There are grave consequences to ignoring your problem and there could be horrible repercussions including lawsuits from the bank, tax consequences with the IRS, and credit damages if you do nothing. Going through a short sale with an experienced, qualified real estate professional can minimize or even prevent many of these negative consequences from occurring and allow you to rebuild your credit quickly and move on with your life.
Under Creative Commons License: Attribution
Original Picture Source: http://www.flickr.com/photos/respres/2539334956/

If you liked What is a Short Sale in Real Estate’ then you may also like:

Home

 

 

 

Leave A Comment...

*