Why Short Sales Make Real Estate Decisions More Difficult
The term “short sale” refers to a real estate sale where the price asked for the property is lower than the amount owed on the property. Paying less for your mortgage sounds good, but is it really? This explanation of short sale leaves out a discussion of the roles various players have in the sale of the property.
How Short Sales Affect Home Owners
According to HOA management companies Naples FL, Home owner’s that are involved in a short sale, often want to sell their property before the bank institutes foreclosure procedures. It takes six months for a bank or other lender to initiate foreclosure procedures once an initial payment has been missed. Foreclosure proceedings are controlled by law and often mean that the tenant is evicted, losing any money paid for the property and with the property title returning to the lender, who then has to sell the property. For a home owner, the explanation of a short sale may include how they can spend more time in their home and alleviate much of the damage on their credit history caused by financial problems.
If you are considering short sale to avoid foreclosure, do a search on foreclosure proceedings for your home state to see how the laws affect you.
How to Negotiate a Short Sale with Your Lender
See Lawyers.com for advice on what to do if you can’t make your payments on your mortgage.
How Short Sales Affect Home Owners that Own the Title to their Property
For home owner’s that own the title to their property, the sheer bulk of short sales coming onto the market may mean that their property value has been lowered. Also, the amount of competition for home sales is increased by short sales, meaning that their full valued home may sit on the market for many months.
Read the advice from Lawyers.com on Short Sales, in can provide good advice about how to handle the loss of your house and how to prevent being scammed.
Follow your real estate broker’s guidance for making your property look it’s best and provide clear evidence that you are the title holder to potential buyers and to your real estate agent. Wait for clear evidence your buyers have the needed credit approval before seeking to purchase other property.
How Short Sales Affect Lenders
The explanation of short sale leaves out how lenders view a short sale. Lenders often see a short sale as a means of having someone else sell a property in which they have lost money. Lenders expect to lose all of the money on many of the affected properties; so having a house sell for less than what is owed, looks to them like someone else picked up the responsibility for this loss. The lenders get the sale monies when the house closes. Lenders may even allow a home owner to cancel their entire debt at the closure since doing so saves them a lot of time and money.
How Short Sales Affect Home Buyers
The best part of a short sale is that a home buyer can purchase a property that is discounted from current assessed tax values as well as current equivalent home sales. The down side of a short sale is that the property closure is often settled in a court of law. The short sale may take many more months to close than a standard house sale. In addition, any explanation for short sale is likely to explain why it is that the home’s title will be in question.
How can Home Buyer’s Avoid the Purchase of a Short Sale?
Check to see if the property price and address are on the foreclosure listing on Foreclosures.com. Beware thinking it has all the answers; we’re selling our home, and there’s a property with a similar address but much higher price. You also will have to provide a credit card to view these listings, even on the free week offered.
You can also check your county assessor’s office on the government web site. In King County, WA, where I live, you can check the information about your home on their parcel tracker. Doing a web search for your county assessor my turn up similar data.
On this report, you can check :
- that the price the property is selling for is higher than the purchased price
- that the owner is shown on the deed, without any lender having a lien
- the assessed value of the property.