There are many terms that you need to understand comprehensively when it comes to property business. There are many strategies to use in order to close the deals and earn profit. Every investor may use different ways or approaches in achieving their goal.
If you are familiarizing yourself with this business, you might as well learn about short sale. It is a term means transaction where lender agrees to sell their property for less than the amount owned. There are many reasons why this case happens.
One of them is homeowner being late in their mortgage. The term short sale sounds simple but it goes along with the amount and paperwork as well as guidelines.
About short sale in real estate business
For a homeowner, it is quite challenging to just sell their house especially with negative equity. They need the lenders approval to be able to sell it. They need to reasons well why they want to sell their house. If not for being late or having some hardships, it will become more difficult to get the lenders approval.
The logic is simple. Lenders don’t likely to own real estate so they prefer to sell it with discount instead of taking it back for foreclosure.
In order to do the short sale, homeowners need to complete needed documents. It is quite similar to mortgage application in reverse. With those documents, homeowner has proof that they are indeed in difficulty to pay the loan.
They need to show hardship letter, worksheet of expenses, tax returns, bank statement, as well as pay stubs.
Along with needed documents as mentioned above, it is also more useful to include supporting documents such as estimation of repair, pictures, recent sales, and even listings to compare.
Another thing you need to know beside the document is that the length of time to close takes longer than you expect. It may take sixty days to close for the fastest period. It can also last to ninety days in average. Meanwhile, investors most likely like to avoid short sale deal since difficult short sale deals can take longer than half a year and even more.
Lots of new investors are curious to find out if short sales damage the credit of homeowner. Of course, this case is not ideal but it is considered better than foreclosure or worse, bankruptcy which stay on the report for long period of time.
However, short sales do impact the recorded mortgage rates. As mentioned before that this is not ideal situation but there are still positive things to take.
Therefore, it is highly suggested to ask help for help from real estate agent who has experience and credibility to handle this case if you are interested in short sales.
Even though this is not perfect case, there are many investors closing the deals every day. Thus, it is important to dig out as much information before doing anything else. Asking for advice from professional will also be helpful so you can take the right decision.
Cecil Kuhn