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What is a Short Sale and Why You Should Have One Done For You by a Agent
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Contributed by: Owen Mcgab Enaohwo
Owen Mcgab Enaohwo Properties
Read more archived articles about Credit and Finance
A Short Sale is a real estate transaction in which the revenues from the sale fall short of the balance owed on a loan secured by the property sold. It is a better solution than foreclosure because all parties involved usually end up in a better position at the end of the process. Getting a short sale approved can be difficult and time consuming for a novice and this is why it is better to hire a Real Estate Agent that is an expert at getting short sales approved.
What is a Short Sale?
A Short Sale is a real estate transaction in which the revenues from the sale fall short of the balance owed on a loan secured by the property sold. They have become the order of the day due to the financial hardships experienced by homeowners whose mortgages are upside down and can no longer make their mortgage payment for one reason or the other. Instead of letting the bank foreclose and ruin their credit, homeowners are now opting to get one done.
Who Benefits from a Short Sale?
After a short sale, the home is sold to the buyer and the seller walks away without any cash from the sale; all proceeds go to the lenders and other creditors on title. The main advantage to the seller is that he/she can avoid owing the balance of the loan and also get to avoid the long term negative consequences of a foreclosure on their credit.
The buyer's advantage is clearly the prospects of getting their new home at a significant discount compared to what they might have paid for it a few years back. Buyers should be aware that the process often takes time and are required in most cases to purchase the property as is. In the end, the reward for being patient is a new home at a reasonable price.
Mortgage lenders benefit as well, they avoid the cost of a lengthy foreclosure process. Most lenders will approve a short sale if the seller can prove that they are financially insolvent and also if the lender is made to see that it's in their best interest to take the discount now instead of taking the property back after a foreclosure and then trying to sell it for less than what they can net right at the moment.
The Short Sale Process
The paperwork required can be quite daunting and laborious to put together but if done properly by an expert, it will get approved by the lender in a shorter period of time and surely benefit all parties involved. The process will differ for each lender but in summary it will usually work as follows:
1) Lender is contacted to discuss the possibility of a short sale.
2) The seller gathers all the paperwork that the bank requires and shows proof of financial hardship.
3) Lender reviews the completed package sent in by the seller and then starts the process to verify if it's in their best interest to accept the offer from the buyer.
4) Then the last phase is the follow up and negotiation phase until the lender approves or denies it.
Hiring a Licensed Real Estate Agent
It is very important to hire an agent to get the short sale approved and find buyers for the house, a real estate professional who can answer your questions and help you steer through the process from the beginning to the end. A Licensed Real Estate Agent also performs their duties with the best interests of the seller in mind because they are bound by certain fiduciary responsibilities and their activities are regulated by the State's real estate commission.
The foreclosure process can be long, stressful and embarrassing for the borrower. Getting a Short sale approved is the answer and all parties involved end up in a better position at the end of the process than if a foreclosure is completed .The lender automatically gets their money when the sale closes and the homeowner can walk away from the property he/she can't afford. The buyer ends up buying a good property at a discounted price. Getting one approved can be very difficult and time consuming for someone who is not an expert, if you are considering it, make sure that you hire a Real Estate Agent that is an expert at getting them approved by the lender.
Note: Owen McGab Enaohwo is a Real Estate Investor at ZENITH PROPERTY SOLUTIONS L.L.C. and a licensed Real Estate Agent. He specializes in Short Sales, Nonperforming Notes, REOs & BPOs. His goal today is to provide real estate solutions that are customized for you and made with your best interests in mind! For more useful information and tips, please go to:
http://www.ZenithPropertySolutions.com/blog
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