Benefits of Real Estate Short Sales
Monday, December 1st, 2008 Subscribe To Our Feed
With the economy heading downhill, more and more people are hearing about real estate short sales. The concept of real estate short sales is not new to most experienced real estate investors but for a homeowner it is an eye opening concept worth knowing about.
When a homeowner is upside down in his or her mortgage, he or she will often hear people pitching real estate short sales to him or her. An upside down mortgage is when a homeowner owes the bank more than the home is worth. If the home can only be sold on the market for $100,000, for example, the homeowner is upside down in his or her mortgage if he or she owes more than that amount.
The problem with an upside down mortgage is that even if the homeowner is willing to sell his or her home to pay off the bank, it is still not enough to be free from the debt. The proceed is not enough to pay off the mortgage and the bank will come after the homeowner for the difference. This causes major financial disaster for the homeowner.
Fortunately there are people, such as private investors, willing to do real estate short sales with the banks. Real estate short sales are homeowners’ only hope when the home is upside down. How real estate short sales work is that say Bob owes his bank $210,000 but his home is only worth $160,000. Then a real estate short sale is done for Bob and the bank accepts it. This frees Bob from all of his mortgage obligation. He wouldn’t have to pay the whole $210,000.
The drawback is that Bob will no longer be able to reside in his home. Although, real estate short sales save Bob from having to pay out of his own pocket and even save his credit, the real estate short sales do not save Bob from having to move out of his home. The real estate short sales are always done by third party buyers. The banks are particular about not letting homeowners stay in their home to avoid them pretending that they could not afford the mortgage payments when they could.
Real estate short sales are not that easy to do. The third party buyer has to send many letters to the bank convincing them that the homeowner is really in trouble and cannot pay his or her mortgage payments. Usually banks don’t want to have to foreclose on the homes or deal with homeowners filing bankruptcy so they are likely to want to consider real estate short sales. Loss of jobs, medical bills, and divorces are great evidence in favor of real estate short sales.
Bear in mind that not all real estate short sales are successful. Some real estate short sales are not and the homeowners end up in foreclosure or having to file bankruptcy. However, if the buyers and the homeowners work together to convince the banks that the situations are truly bad, the banks are likely to consider accepting the real estate short sales.
Technorati Tags: No Tags
Related Tags: No Tags
Possible Related Posts
Are You Trying To Become Involved With Real Estate Short Sales?Short Sales Are Exhibiting Profit for Real Estate InvestorsSecrets of Pre-Foreclosure Investing
