The term 'real estate short sale' is being bandied about more and more as of late. The popularity of real estate short sales in TV and other media can be attributed to financial institutions choosing them over foreclosure in a negative real estate market.
In all parts of the country, real estate prices are down and the time it takes to sell properties has risen dramatically. It is no exaggeration to say that some regions are experiencing a virtual market meltdown (the Detroit market is one good example). A real estate market that is not doing so well is the giving the need for short sale real estate opportunities to grow.
The exact definition of a real estate short sale is that it is what occurs when a bank agrees to let a property be sold for less than the amount owed to the financial company. There are two conditions that must be met before a bank is likely to approve this: Firstly: Market values are such that the property's sale price cannot cover the outstanding mortgage balance(s). A complete inability to make the mortgage payments must also be present for the bank to agree to the sale.
Let's look at an example property that was bought five years ago for the rate of 217,000 dollars with an adjustable rate mortgage. Let's also expect that two years after purchasing the property, the owners took an additional mortgage of 10,000 dollars which brings their debt to 227,000 dollars. Also, we have to remember that in five years, the amount of time that the mortgages have been paid off is negligible. We'll also imagine that the property value has decreased to 215,000 dollars while the mortgage interest rate has increased from seven to eleven percent. Add in the additional problem of one of the owners having lost their job, and you end up with a very likely real estate short sale scenario.
The bank may decide to save expenses and time delays that a foreclosure would cost by simply allowing a short sale. The reason for this is that the banks believe it is better to get the property off their books and accept a smaller amount of money they are guaranteed to get than to accept an unknown amount in the future. If the lenders and owners do not agree on the terms of the sale, complications can result, but in general, that is how the real estate short sale works.
Admittedly, many owners may find the real estate short sale a very painful experience, but things could be much worse for them. The methods may not be flawless, but it will beat having a foreclosure on the credit report. Real estate investors should understand that the short sales give them a wonderful opportunity to purchase property. - 16928
In all parts of the country, real estate prices are down and the time it takes to sell properties has risen dramatically. It is no exaggeration to say that some regions are experiencing a virtual market meltdown (the Detroit market is one good example). A real estate market that is not doing so well is the giving the need for short sale real estate opportunities to grow.
The exact definition of a real estate short sale is that it is what occurs when a bank agrees to let a property be sold for less than the amount owed to the financial company. There are two conditions that must be met before a bank is likely to approve this: Firstly: Market values are such that the property's sale price cannot cover the outstanding mortgage balance(s). A complete inability to make the mortgage payments must also be present for the bank to agree to the sale.
Let's look at an example property that was bought five years ago for the rate of 217,000 dollars with an adjustable rate mortgage. Let's also expect that two years after purchasing the property, the owners took an additional mortgage of 10,000 dollars which brings their debt to 227,000 dollars. Also, we have to remember that in five years, the amount of time that the mortgages have been paid off is negligible. We'll also imagine that the property value has decreased to 215,000 dollars while the mortgage interest rate has increased from seven to eleven percent. Add in the additional problem of one of the owners having lost their job, and you end up with a very likely real estate short sale scenario.
The bank may decide to save expenses and time delays that a foreclosure would cost by simply allowing a short sale. The reason for this is that the banks believe it is better to get the property off their books and accept a smaller amount of money they are guaranteed to get than to accept an unknown amount in the future. If the lenders and owners do not agree on the terms of the sale, complications can result, but in general, that is how the real estate short sale works.
Admittedly, many owners may find the real estate short sale a very painful experience, but things could be much worse for them. The methods may not be flawless, but it will beat having a foreclosure on the credit report. Real estate investors should understand that the short sales give them a wonderful opportunity to purchase property. - 16928
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