The short sale market has become a dominate fixture in today’s San Diego real estate market presenting home buyers and investors an opportunity to obtain property below market value – if you know how to avoid the obstacles in dealing with short sales. This article is an overview of the short sale process.What is a short sale?
A short sale is a sale in which the seller’s lender(s) agrees to a loan payoff of less than the balance owed. For example, if you owe $500,000 for all of your home mortgages but the market value of your house is $400,000, attempting a short sale may be an option. If you obtain an offer from a buyer willing to pay the market value of $400,000 the lender may agree to accept the $400,000 as full satisfaction of their $500,000 note.
Why Would A Lender Consider A Short Sale?
It is all about the money. A lender may consider a short sale because it may be less costly for a lender to agree to a short sale in comparison to the foreclosure process. The foreclosure process is time consuming and expensive for the lender and may include costs for attorney fees, the eviction process, repairing damage to the property, and costs associated with reselling the property. The lender will weigh its options and may decide that taking a loss on the loan is better that taking title to the property through foreclosure and incurring the costs and issues related to maintaining and reselling the property.
Why Would A Seller Consider A Short Sale?
As a result of a nationwide declining economy many homeowners are behind on their mortgage payments and the value of their home is less then their loan. This makes it difficult or impossible to sell their home for the amount necessary to payoff their mortgage debt. The prospect of losing their home through foreclosure can be very emotional. A short sale may be a better option than foreclosure for both tax and credit consequences depending on the homeowner’s concerns and circumstances. We suggest you discuss this with you tax advisor or accountant. The IRS has published an article about The Mortgage Debt Relief Act of 2007 which can be found at https://www.irs.gov/newsroom/home-foreclosure-and-debt-cancellation.
Palisade Realty Can Help Short Sale Buyers And Sellers.
For buyers, we will locate short sale properties suitable for personal and/or investment purposes. We will research the market and provide professional advice so you can make an informed decision. We do not charge a commission for our services unless you buy a property and the seller typically pays our commissions. There are no up-front fees to get started.
For sellers, we will explain and assist in the preparation of a short sale package and deal directly with your lender(s). We do not charge a commission for our services unless we sell your property and the commissions are paid from the sale proceeds. There are no up-front fees to get started.