Real Estate Short Sales- What You Need To Know

Real Estate Short Sales- What You Need To Know
With the economy how it is and the amount of houses going
up for foreclosure everyday it is important to know your
options. One option that is available is to short sale your
house.

Below you will find all you need to know about this great
option.

A real estate short sale is when the bank or mortgage
lender agrees to discount your loan balance because of an
economic hardship that you are facing. What happens is you
sell your mortgaged property for less than you owe on the
loan, and turn the money over to the lender which will
fulfill your debt.

In some situations though the lender has the right to
approve or disapprove of the sale. Some of those situations
are if the current real estate market is down, the lender
will not approve the sale because they will make less money
than they could. Also, depending on your personal financial
situation, the lender may not approve the sale.

The reason many choose to do a short sale is because it
prevents a home foreclosure. Typically these sales result
in a smaller financial loss than a foreclosure which is why
many banks consider this a good option. The advantages to a
home owner are the fact that these sales are quicker and
less expensive than a foreclosure, and many do not want a
foreclosure on their credit history.

Lenders have a department, called a loss mitigation
department, where all potential short sale transactions are
processed. This department typically does not allow this
form of sale until a Notice of Default has been issued or
recorded where the property is located. Before the sale the
lenders have to approve of any listing agent's or buyer's
commission, which is one of the main reasons that
non-brokered short sales with a facilitator save on the
margin.

Depending lender, you may face a higher tolerance for short
sales and mitigated losses. Some lenders have
pre-determined criteria for these types of transactions but
distressed lenders will usually allow any reasonable offer,
after a loss mitigator approves. You may need to get
approval from several people, such as junior liens, for
second mortgages, HELOC lenders, and HOA, special
assessment liens.

Real estate short sale is a much better idea than
foreclosure because it will not hurt your credit report as
much, it will save you a lot of time and money, and many
lenders would rather a foreclosure whenever possible.

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