| These short sale information facts are designed to | | | | route for all parties involved. In a short sale, the bank or |
| help you understand how a bank determines if you | | | | lender agrees to accept an amount less than the |
| qualify for a short sale. If you've ever driven in most | | | | actual loan balance, "As payment in full!" |
| neighborhoods or scanned various online real estate | | | | In our above example with the $58k in negative equity, |
| "For sale" ads, you have no doubt seen the, "Short | | | | they may accept a amount of $55,000.00, if that's |
| Sale" ads popping up in numerous communities. What | | | | what the market is bearing. I can hear people |
| is a Short Sale in layman's terms please?" In a nutshell, | | | | screaming, "No will a bank accept an offer like that!" |
| when it comes to real estate, this type of transaction | | | | They will and they are IN THIS CURRENT MARKET! |
| becomes a consideration when a homeowner owes | | | | That's why this short sale information is so vital. |
| more on a property than what the property will sell for | | | | Short Sale Information and The Cost of a Foreclosure |
| on the open market. | | | | - What most people don't factor in is the cost of a |
| Short Sale Information and Negative Equity - For | | | | foreclosure. On average, a foreclosure will cost a bank |
| example, let's say a homeowner owns a home that | | | | around $50k to $60k per property. That figure includes |
| appraised at $239,000.00 when he bought it five years | | | | but is not limited to the legal fees, court fees, |
| ago. However, five years later, it's appraising at | | | | appraisals, clean up fees, repairs and maintenance, |
| $165,000.00. He currently owes a first mortgage of | | | | insurance and taxes and upkeep until the property is |
| $198,000.00 and a second mortgage of $25,000.00, | | | | no longer on the books at the Bank Owned REO |
| bringing his balance to a total of $223,000.00. That | | | | Department. |
| means he is upside in the house by $58,000.00. Or as it | | | | Based On This Short Sale Information Will The Bank |
| is often called, "Negative equity." The bottom line is; he | | | | Foreclose? -Let's look at the facts and the numbers; if |
| owes more on the home than it is worth. | | | | the bank forecloses, fixes the property up and puts it |
| How In The World Can That Happen? - Here's a | | | | on the market for $165,000.00, serious homebuyers |
| common scenario answer; let's say he bought the | | | | are going to chuckle and keeping driving by and |
| property when credit was real loose and it was walk | | | | investors are going to ROTFL Roll On The Floor |
| in the part to get financing and then immediately turn | | | | Laughing!\ |
| around and add a second mortgage. | | | | Especially if they are in the neighborhood and see "For |
| If you recall, five years ago, a lot of homebuyers were | | | | Sale" signs like these (For Rent, FSBO, Lease With |
| recipients of over inflated appraisals. They could have | | | | Option, Rent to Own, No Credit Check, Bank Owned, |
| been buying a house that was only worth $159,500.00, | | | | Make An Offer, Bank REO, etc.) all over the place. |
| but they'd get an appraisal at $239,000.00. Regrettably, | | | | With that type of competition the bank could be |
| people bought homes like that by the truckloads: over | | | | forced to maintain that property for years and that's |
| inflated appraisals and easy credit. | | | | not going to happen! |
| Short Sale Information and Smart Home Buyers - | | | | Short Sale Information and Loss Mitigation - When the |
| They never considered what would happen if the | | | | situation looks bleak, the issue is usually sent to the |
| market bottomed out or if we hit an economic | | | | Loss Mitigation Department to figure out which option |
| recession. When things took a nosedive, these | | | | IS GOING TO COST THEM THE LESS DAMAGE! |
| negative equity homeowners were some of the first | | | | They have accepted the fact that they are going to |
| to feel the heat! | | | | lose money on the deal, so their only question is, "Will |
| Because they are upside down with the equity, they | | | | we lose less on a foreclosure or on a short sale?" |
| aren't going to find any buyers on the open market. | | | | Typically, a short sale is quicker and less expensive |
| Let's face it; in this market, no smart home buyer is | | | | than a foreclosure. Some banks will require that you |
| going to pay full price for a property. So the | | | | prove you can no longer afford to make the |
| expectation that they would pay more than the | | | | payments, but once you jump through those hoops, |
| property is worth borders on insanity. | | | | you should have no problem making the deal happen. |
| Don't Let This Short Sale Information Shock You! - In | | | | One last caveat; if you are upside in your home, it's |
| these instances, this type of sale is probably the best | | | | best to TAKE ACTION NOW! |