Short sale foreclosure involves two types of real estate techniques. The first involves real estate that has been repossessed by the mortgage lender. These properties are also referred to as bank owned or real estate owned (REO).
The second type of short sale foreclosure references property which is still in the borrower’s possession, but on the brink of foreclosure. Lenders agree to accept less than borrowers owe in exchange for quick sale of the real estate. Short sale options are typically offered after all other options to prevent foreclosure have been unsuccessful.
With the high rise in foreclosures these days, even those who do not invest in real estate are starting to hear the term “real estate short sale” or “mortgage short sale.” A simple definition of a short sale of real estate is an investor or buyer making a deal with the primary mortgage holder to accept less than the amount due on a mortgage; rather than the lender taking over the property through the foreclosure process and then ultimately loosing money on the property by selling it at a foreclosure auction.
Maybe you are near to having your home foreclosed and you want to do something about it. A short sale may just be what you are looking for. This happens when a person sells his property for less than what the amount is, in terms of the remaining loan balance. If you would like this to take place, of course the lender must say yes to the said short sale.
Home foreclosures have become a huge problem as of late. Many people can’t even afford to pay their credit card bill much less a house payment. It has even become harder to get a reasonable home loan due to the economic crunch. This is why some homeowners have turned to the mortgage short sale. The problem with this line of thinking is that it could negatively affect your credit score. Keep in mind this is only an alternative to filing bankruptcy or going into foreclosure.
How do short sales work? What are the down sides about buying a “short sale” home?
The biggest down side is that it can take months.
Also, the home owner may not have actually cleared the sale with the lender first. It is entirely possible that the sales price is a bait and switch. Low enough to get you interested, but even at full price there is no possible way the bank will agree to the sale.
