Understanding the Short Sale Process

In real estate industry, short sale has been considered to be one of the worst things that can happen to your house.  Of course the top notch on the list is no other than foreclosure.  Short sales seem to be much better than bankruptcy and foreclosure.  When you plan to sell your house, majority might think you are doing a short sale.  This is very common in the areas where house market values went down substantially.  And such process has several advantages to those sellers who are on the verge of getting a foreclosure as well as buyers who find for a deal on their next house to live.  But short sales can also be confusing, to give you an overview of this complexity, go over the rest of this article.

When you talk of short sale, this is primarily selling a house with a price lower than the mortgage value.  A seller who faces the threat of foreclosure engages into a contract with their mortgage lender to get a price for the house that is less than the amount they borrowed.  The seller has no income on the sale but stays away from the probable issues and prevents from making it a foreclosed property. 

On the other hand, short sale can have some benefits.  When sellers decide to dispose the property, they are free from going through the tedious process of foreclosure and avoid the impact of such on their credit record.  In a short sale, the seller and the lender talk together and determine the details of the agreement, but it is usually the sellers who finish a short sale to put an end to the existing loan.

The major advantage to the buyers is the fact that they are transferring into a new house at a cheaper price.  In addition to that, buyers may think that short sales have other advantage over foreclosures since they will not have any problems on removing the seller from the property.

Certainly, mortgage lenders have other advantages also.  In such process, lenders do not have to undergo the complicated foreclosure proceedings.  More than anything else, lenders are concerned in getting their money back, and they basically want to stay away from taking the responsibility for disposing the property.  Thus, short sale can actually do well to them.

On the other hand, it is inevitable that you can encounter some drawbacks in this process.  Initially, lenders will propose to ease the seller of the responsibility of settling the balance of the loan.  Thus, sellers should obtain a firm commitment from lenders that says this is part of the agreement.  Furthermore, as much as the sellers want to avoid foreclosure, short sale can still affect their credit record to some extent.  Hence, sellers should tackle this matter with their lender to know how the procedures will be reported to the credit institutions.

One important thing to consider is that sellers are evaluated if they are qualified for a short sale or not.  Take this as an example, few lenders will engage into a short sale transaction with sellers who have a good mode of payment.  So, if you are a seller and planning to get a short sale, you will have to talk to your lender and ask the available alternatives.

Overall, if you are a buyer who is planning to enter into a short sale, it would be prudent to get an advice from a real estate broker who can give you a complete explanation of how the process works.  In this manner, you can be prepared to incorporate all the necessary information to complete the transaction and live into you new abode.