What Is A Short Sale In Real Estate?
Short sales appear in many different industries including the stock market and real estate, but what is a short sale after all? Let’s break down short sales in real estate. Consider the scenario: you are selling your home, but the offer you receive is so low it will not cover the amount you owe on your mortgage; however, you need to unload the mortgage so you take the offer. This is a short sale in its most simplistic form because you end up ‘short’ paying your lender back.
According to statistics from the Realty Trac, a real estate information company, approximately 5% of all single-family home sales in 2016 were made as short sales. In most cases, the homeowner was pushed into the short sale by personal financial difficulties making it impossible to pay their mortgage unless they took the short offer. This happened a great deal across the US during the real estate crunch of 2008.
What Is A Short Sale?
While the information above described a short sale, that was in its simple form. Here we have a more detailed discussion of what a short sale is.
The short sale begins similar in an identical manner to all other home sales – you contact a real estate agent and list the home then wait for an offer from a potential buyer. If you list the home and mention it is a short sale or subject to lender, there is more chance of people offering to buy. It is only once you accept the short sale offer that things will become complicated. You will need to receive permission from the bank to accept a short sale offer as lenders tend to lose money with short sales and rarely agree to ‘hope on the bandwagon’.
To assess whether or not the short sale should be approved, the bank requires you to submit documentation including an offer letter and a ‘hardship letter’. The hardship letter explains why you cannot make further mortgage payments. Further documentation that needs to be submitted includes medical bills and income statements – both items that can back up the hardship letter. At this point, the bank will have the home appraised and determine if the offer received is fair; then they will decide if the deal should be allowed.
What Is A Short Sale Going To Do For The Seller?
While selling a property using a short sale is not ideal, specialists in the area agree that it is smarter than pursuing bankruptcy or foreclosure on the property. Below are more benefits to using a short sale If you need to sell my house fast here are some citations:
• A short sale does less damage to the homeowner’s credit report and score than foreclosures.
• Homeowners will maintain their dignity by selling the home and not facing foreclosure or bankruptcy.
• Homeowners can remain in the property until the sale is completed. In contrast, foreclosures require homeowners to vacate the property.
• There are no real estate agent commission rates or closing costs attached to the sale If you Need Help Selling Fast Check Out Some Of This Company www.sellmyhousefast2.com.