As many homeowners watch their home values sink below the amount they owe on their mortgages, more and more sellers are considering negotiating a short sale. If a lender will agree to the transaction, sellers will have the chance to move out of their homes, without the impact of a foreclosure on their credit report. Realtors handle the market analysis, the purchase, and the listing agreement. Because these transactions tend to be complex, both the seller and the buyer should work with a realtor who is an expert in these types of sales.
A short sale occurs when the proceeds from the sale of a home are less than the homeowner owes on the mortgage. Sometimes, a bank agrees that taking a loss on the loan is better than dealing with a foreclosure. In some cases, the borrower still has to repay the deficiency, depending on state laws. In other cases, the lender discounts the loan balance, and then allows the property to be sold.
Before negotiating a transaction, both the buyer and the seller should consider several factors. The sale will show up as a settlement on the seller’s credit report, and will remain on the report for up to ten years. Buyers will probably purchase the property “as is,” so paying for an inspection will be crucial. Both parties should consult a tax expert, as the sale may have unexpected tax ramifications. Additionally, these transactions typically take longer than a typical home sale, so all parties should be prepared for a lengthy negotiating process.
To initiate the process, a homeowner should begin by calling the bank. Most of the time, lenders will request a letter of authorization, which will allow them to share the borrower’s information with realtors, lawyers, and title companies. Also, lenders may ask for a hardship letter, detailing the reasons that sellers want to sell for less than they owe. Common reasons include unemployment, or unexpected medical emergencies.
When a homeowner is underwater on a mortgage, a short sale may be the best way to avoid foreclosure. When a homebuyer is looking for a bargain, even though the process may be a little more complicated, negotiating this type of transaction may provide the opportunity of a lifetime. To begin the purchasing process, both parties should consult an expert who specializes in short sales.
Should you have any questions about a short sale or if you’ve decided that a short sale is your best option, please contact Albert Clark, your Seattle Short Sale Expert. He is the Real Estate Consultant you can trust to give you honest, reliable advice.
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