Short Sale - a way to Stop Foreclosure

Short Sale

What is a "short sale", you might be thinking. A short sale is something that is becoming a more accepted practice in the mortgage and real estate industry. A lender agrees to a short sale, which an acceptance by the lender to discount the borrowers mortgage. Lenders usually have a requirements before they will allow their borrower off the hook so easy.


Fannie Mae and Short Sales

Fannie Mae is pushing for more short sales to help improve the market and get properties selling again. Short mortgage payoffs are mainly done when the homeowner owes more than their home is worth. Accepting a short payoff helps lender in the long run, by getting them their cash now and they avoid sitting on a property, paying fees and operating costs. It is believed that short sales save lenders 30% more than repossessing a property after foreclosure. They don't have to take possession, work with a real estate agent, pay monthly maintenance.

Homes are being saved from foreclosure by lenders acceptance of short payoff terms.


Homeowner Benefits

Homeowners are also assisted in a short payoff. They don't have to pay the difference the lender accept from the short sale and some good accountants can completely eliminate the tax burdens through a few deductions. A homeowners wouldn't have to do repairs, or come out of their pockets to close the transaction if the agreement is set up properly. Lenders are willing to assist with closing cost, paying off tax arrearages. Judgments and liens also may satisfied if the creditors are willing to discount their debts. In other words, the seller gets a clean slate without the repercussion of a foreclosure.

Buyer also wins!

The buyer in the transaction is benefited as well, since they are getting a property below market value to pay for some of the conditions of the property that need to be fixed. Normally properties that are being sold short, needs a few thousand dollars to get the house in shape, which will be adjusted from the purchase price.


Real Estate Agents, are they necessary?

Most people are turned away by real estate agents when they owe more than their property is worth, because the agent wants to know that they will receive their full commission. Lenders are really tough on real estate commissions because they feel like the transaction could have gone along without the assistance of an agent. They usually restrict a real estate fee of 4% for one agent doing everything and 2.5% for two agents, one working with the buyer and the other will the seller. Plus, waiting on these types of transactions can take months and some take upward of 6 months. Agents along with a lot of buyers don't have the patience to wait for the deal to transpire.

A few years ago agents didn't know what a short sale was, now more are learning about the process, but still have figured out how to close the properties fast and efficiently. Short sales require the agents full attention and most agents just haven't adjusted to anything other than listing their property and wait for another agent to bring them a buyer. That is why lenders don't respect the commission agents are asking for because it just takes too long for them to close.

There are professional house buyers to will put the transaction together if it will benefit them. Looking into selling your home to an independent buyer might the best way to sale your house short. Especially if the buyer is willing to let you work with a real estate in case the buyer can't get the price they need, you will still have the added exposure of the Multiple Listing Service, what the realtors use to network with other agents.

Including a professional buyer can really get things moving a fast pace and if the buyer closes the deal before the agent, you will not have to pay a commission. Closing through a real estate attorney or title company can save you thousands of dollars in real estate commissions.

In Summary

In order, to get the short sale process started you should contact your lender to see if they will be open to selling your house with a discounted mortgage. For a few frequently answered questions you can go to Short Sale.

Hope you have learned what a short sale is and how it can help you avoid foreclosure. As long as your lender is willing to accept less than what is owed on your mortgage your chances of selling your house can improve tremendously.


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