What is a Short Sale? |
A short sale is, in brief, when a lender or owner of a property is willing to accept less than the total amount due to settle the property. Not all lenders and not all properties will be eligible for short sale— especially when it makes more sense fiscally to foreclose on a property. In order for this to happen, in general, the homeowners have to initiate the short sale or find a willing buyer or investor.
The Agreement Between the Buyer and Seller
Once the seller has found a potential buyer, the first step is to decide on a fair price for the home. Generally, the buyer offers to pay the remaining balance of the mortgage, or propose a settlement for less than what is due. All payments the buyer make go to paying off the debt of the mortgage. Once the buyer and seller can agree on a price, the next step is to have a contract prepared.
When having a contract prepared, you should ensure you recruit the expertise of a reputable real estate attorney. This insures both parties are receiving a fair deal.
After the Agreement
Once the agreement and contract are written up, the lending company who has the mortgage on the home is required to approve the final deal. The lender has the lien on the home and, as such, they have the final say on the loan of the house. When dealing with the lender, the buyer generally handles all of the contact and negotiation. An outline of the settlement is sent to the lender via any method (usually to the Loss and Mitigation Department), the representatives of the lender or bank will review the offer's details and make the final judgment as to whether or not the settlement is acceptable. The success of the lender's approval depends on many factors, highly based on the real estate market trends, the appraised value of the property, and the outstanding balance.
Important Factors to Consider
When participating in a short sale, it's wise to consult a real estate attorney whether you're the purchasing party or the selling party. Some tax laws may require you to pay taxes on the amount forgiven in the mortgage if you're the selling party. If you're the buying party, ensure the short sale covers the principle lien on the home and be prepared for any other mortgages, ask about the mortgages on the deed before purchasing a home or property in a short sale.
Schwartz Law Firm – Real Estate is about Las Vegas short sale focused on helping homeowners who are in financial distress by guiding them through the challenging process of selling their homes when they are worth less than they owe.(http://www.andopportunities.com)
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