National Quick Sale
Foreclosure is one of the worst nightmares of a property owner or investor. Going through foreclosure is not fun at all and during such a stressful and crucial period, home owners or investors would try their best to find a solution to get out of foreclosure. One of the effective solutions in this regard is short sale, this helps in generating Finance for Builders. While most of the people may adopt the short sale solution when facing foreclosure, it is important to remember that this is not the only solution.
A short sale can be defined as a sale wherein the amount realized from the sale of property will be lesser than the balance of debts which are secured by liens against the real asset property. Since the property owner would not be able to repay the lien in full therefore the lien holder would have to be convinced about releasing the lien on the property and accept an amount which is lower than the amount owed. Now, the shortage or the unpaid balance that the home owner owes to the creditors is called deficiency. This amount can be forgone if the creditors permit the home owner to do so.
How does short sale help?
While a short sale proves to be great as a source of finance for builders, one of its major shortcomings is that it calls for a lot of paperwork and documentation. Thus, because of this, the short sale process becomes very time-consuming. However, if this process is carried out correctly, it would be beneficial for the parties involved, i.e. the lender, the buyer and the seller. The buyer here benefits by getting a good deal on the real estate property, the seller or home owner benefits because heshe can avoid foreclosure and a negative impact on hisher credit score and lastly, the lender benefits because heshe do not have to deal with the uncertainty of the foreclosure process.
Process of short sale explained
As a property investor, it is very important to know and understand the short sale process in details so that you would be able to conduct it successfully and correctly when the need arises. The short sale process starts by contacting the lender to speak about the possibility of having a short sale. The home owner or the seller then issues an authorization letter and provides the escrow agency or buyer with confidential information about the property and loan. The lender would then review the settlement statement in question. This statement would encompass details like real estate commissions, expenses, fees, remaining loan balances, proposed selling price and so on.
The home owner or seller would then prepare a 'hardship' letter explaining in details about the financial difficulties faced by him. Here, the lender can verify or validate the financial condition of the seller by taking a look at hisher investment accounts, paystubs, bank statements and so on. The lender will then look for a real estate broker in order to facilitate the sale of the house. The lender would also be in charge of scrutinizing the purchase agreement prepared by the broker in order to see if everything is fine. If yes, then the short sale happens. Thus, this is how a typical short sale of property happens.