Short sale foreclosures favor both the seller and the buyer. The seller gets to save their credit reputation by preventing foreclosure and the buyer can realize savings from the low price of the home.
The Principle Behind Short Sale Foreclosures
Home owners who find themselves in dire financial straits and under threat of foreclosure often decide to go for short sale foreclosures. Their goal is to save the home for being foreclosed thereby saving their credit score from being substantially downgraded. These home owners then request that the mortgage provider allow them to sell the home for less than the outstanding mortgage. In this type of transaction there is typically a buyer ready to continue the mortgage for the home owner-seller.
The seller has to execute a document indicating that they are no longer capable of continuing the mortgage. This letter is addressed to the mortgage provider. The mortgage provider will also require the submission of other pertinent documents relating to the short sale plan which may include the new price, the remaining balance on the loan and other incidental expenses. When the lender decides that the plea is fair and justifiable, the request for a short sale will push through.
What Else Is in it for Sellers?
Apart from saving their credit reputation, sellers can also avoid the long and drawn out process of foreclosure. They are free to re-apply for a loan at a later time when they have recovered from their financial difficulties.
Sometimes this type of foreclosure can be a bit intricate and both parties can benefit from the expertise of a local real estate practitioner who can carry out the process. Real estate brokers and agents charge a commission for their service so be sure to include this in the computation.
How About the Buyers?
Many others have successfully purchased a home through Short sale foreclosures. The main draw of course is the potential for savings as these homes are sold cheaply. Its actual cost would be remaining mortgage balance plus some more for expenses. The home is still currently being occupied by the owners so there is a good chance that it is still in good condition. This means that the cost of repairs may not be that high.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.