A foreclosure is considered one of the most frustrating events of a homeowner’s life. In fact, a lot of families have gone through this struggle, and many of them were evicted from their homes. In 2008, during the time when the U.S. economy was hard hit by the recession, around 2.5 million foreclosures were filed by families and homeowners. As it is, one out of 45 homeowners in 2008 filed for foreclosure. Such financial struggle happens because of certain factors.
For instance, homeowners may have a hard time meeting the deadline of paying their due mortgage payments. While some have the resources to complete the payments, their chance to keep their houses from foreclosure is slim because of the fact that they are way behind their due dates. With these reasons, confusion sets in between the homeowners and their lenders, resulting into miscommunications and destruction of overall working relationships. However, these problems have been seen as a thing of the past.
People nowadays are not aware that there are now available financial solutions when it comes to dealing with struggles within the real estate world, particularly when it comes to foreclosures. These solutions have brought great hope for families and homeowners who are finding it difficult to maintain their real property from a possible foreclosure. One of these solutions is called a short sale.
Now what is a short sale? It has been a familiar term used within the real estate circles, although it has already existed in the past but was rarely practiced by banks and lenders. A “short sale” refers to the transaction between a homeowner and the mortgage company in which the property is sold short to a potential buyer in less than the full balance of the loan that is currently placed. It means that the homeowner would sell his or her own property “short” of the current market value of the property.
Here is how to short sell a real property:
1. First, the homeowner must find a short sale expert who can help him or her market the house and be able to spot a potential buyer to make a transaction that would soon turn into a short payoff.
2. Second, the homeowner must provide financial information through submission of relevant documentation such as copies of tax returns, statements of assets, and the like. Once collected by the short sale expert, he or she will give it to the lender involved, including the purchase offer.
3. A two- to three-month waiting period is enough for the lender to review the documents submitted by the homeowner and the purchase offer via the short sale expert.
4. Then, a negotiation takes place. The buyer’s agent would accept buying the house short of its real market value. The homeowner’s lender will then send an appraiser to a bank to inform about the real market value of the property. If it is a reasonable market value, a letter of approval would be issued.
5. Once the homeowner agrees, the buyer will be notified and the house is considered short sold.
A short sale would be a reasonable choice for the lender to execute a deal because of certain reasons. First of all, foreclosing a real property is time-consuming and too costly. Also, the lender won’t be able to deal with the eviction. Moreover, a short sale is otherwise a time-saver for the lender.
Photo Credit: Scott Gordon Realty