asically a short sale is
when a property is sold for One alternative is for the buyer
a price which is less than to refinance into a better loan.
the remaining balance owed on the Unfortunately this is rarely
property. possible, because now the buyer
has missed payments and has worse
For instance: A buyer purchased a credit than when they started,
property in 2005 using and not to mention there is likely no
adjustable rate or interest only equity in the home.
mortgage that was due to reset in
two years. So today, the interest Another alternative is for the
rate adjusts, causing the monthly buyer to file bankruptcy, which
payment to rise by 25-50%. This we all know is a serious endeavor
is one scenario, another one which should be avoided if at all
could be that the buyer simply possible. It will leave the buyer
lost a job or had some other with no credit for many years.
financial hardship which is
causing them to have trouble A third option is to simply let
paying the mortgage. In this the house go into foreclosure and
situation, once three mortgage walk away. This option will leave
payments are missed the buyer is your credit ruined for 7-8 years
heading toward foreclosure. and make it highly unlikely that
you will be able to to purchase
Sometimes a buyer can renegotiate another home within that time
the terms of the loan and have frame.
the lender add the past due
amount to the "back end" of the So in reality, the best option
loan and have you pay it off. for someone in this situation is
This is done on a case by case to hire a Realtor and try to
basis. proceed with a short sale. This
way, you get the property sold credit any day.
before it forecloses and
basically ask the lender to In a short sale, the property
forgive any left over debt after needs to be priced attractively
the home is sold. to make it move quickly. This
doesnt hurt the seller, because
It's called a short sale because remember they are facing losing
the lender will end up "short" on the property anyway, and the
recovering the money they lended money is going to the lender, not
on the property. This however is the buyer. For this reason, it's
good for YOU because you can get the lender who accepts or rejects
out of the property and not be the offers that come in, and they
responsible for the remaining also must approve the commission
debt. On the other hand, you may being paid to both real estate
be subject to being taxed on the agents involved. This is one
amount that you are forgiven. So reason why many Realtors refuse
if you owe $600k on your to work short sales, they can end
property, but that is all you can up working for months and never
get for the property on the get paid if the lender doesn't
market, then after real estate approve the commission (or the
commission and other fees you sale itself).
will end up with around $550k or
so. This means the lender must
agree to forgive the $50k
balance, which would mean that the IRS will treat that $50k as type="text/javascript">
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About the Author:
Oakland California Real Estate
Oakland Condominiums
Montclair Real Estate
