A real estate short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying the home from a seller, you purchase the property directly from the lender for a discount. Not all lenders will accept short sales, especially if it would make more financial sense to foreclose, therefore not all sellers or properties qualify for short sales. According to about.com, “The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are "don't wanters" (2009).”
When considering purchasing a short sale, there could be potential drawbacks. For buyers protection, they should consider the following: obtaining legal advice from a real estate lawyer and to call a tax accountant to discuss short sale tax ramifications.
Many short sales do not get approved or fall through for numerous reasons. According to about.com, “Learn the step-by-step process to initiate a short sale, starting with the homeowner-borrower and moving through lender negotiations to the closing (2009).”
- The property valuation analysis for a short sale
- Contacting the lender for a short sale application
- Writing the hardship letter for a short sale
- Backing up the numbers with the short sale package
- Elements of a short sale purchase agreement
- What the lender does with the short sale package
- Negotiating the short sale with the lender and going to closing
http://homebuying.about.com/od/4closureshortsales/a/shortsalebasics.htm
http://www.foreclosureuniversity.com/studycenter/freereports/what_is_a_short_sale.php
http://realestate.about.com/od/realestateinvesting/tp/short_sale_go.htm
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