How do you define a "Short" Sale?
A "Short" sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs, such as property taxes, transfer taxes, and the brokers’ commission. The seller is unwilling or unable to cover the difference. It is a process where a negotiated settlement is made between the lender that holds the mortgage and the seller for a third party buyer usually facilitated by a Real Estate Broker or an Attorney, before the foreclosure process is initiated by the lender.
Be aware of some important issues while dealing with a "Short" sales and the three stages of a property that is "Subject of Foreclosure".
Pre-Foreclosure - This includes a "Short" sale, deed in lieu of foreclosure, cash for keys, quitclaim deed, reinstatement of mortgage forbearance agreement, etc. Most lenders will not consider a possible "Short" sale if the mortgage payments are not behind by at least two or three months. Most lenders prefer working with a Broker who could make sure all the state and local real estate laws are complied with including proper disclosures as in a regular sales transaction.
Foreclosure - A the sheriff's auction lenders bid against everyone else to gain control of the property "deed". Most liens against the property are extinguished after this action.
Post-Foreclosure - Majority of the properties that are subject of a foreclosure end up in this category. The property then becomes a liability to the Lender, FHA (HUD), or VA and all except VA hires a Real Estate Broker to list and sell the property. HUD and VA properties are on the Internet (HUD.gov/homes/ and Vahomes.org) bids must be placed thru a registered Broker.
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