Thursday, September 18, 2008

Understanding What A Short Sale Is

The Mortgage Bankers Association, tells us that in the next three months, 250,000 new families will enter into foreclosure. Which means that one child in every classroom in the USA is at risk of losing their home, because Mommy and Daddy are behind on the house payment, usually through no fault of their own.. This means one in 200 homes will be foreclosed on. These statistics are alarming to say the least, but it's what is happening in today's real estate market. Fortunately, it can be a win-win for everyone involved: the home seller, the home buyer, the bank and the real estate agent.

This decline in property values has created many challenges for both real estate agents and homeowners, but a “Short Sale” could be the solution to a happy ending. So, what is a Short Sale? A short sale is a loss mitigation solution. The easiest way to explain it is; When an agent goes into a potential seller’s home and asks “how much do you owe on your home?” and the answer is higher than the neignboring com parables show the current value of the home is, that qualifies the home as a potential Short Sale.

When a homeowner falls behind two months on their mortgage payment and can also show that changes in his/her income reduce their ability to stay current with their mortgage could be considered a short sale candidate. The homeowner is considered pre-foreclosure when the bank sends a notice of default or a notice that they’re taking legal action to collect the debt, this is usually sent certified or registered. Contrary to what most homeowners believe, a short sale can still take place during the foreclosure process. Only two reasons would prevent the homeowner from making a short sale;

The foreclosure has already taken place and the home is placed in an auction.
The homeowner files for bankruptcy.

Now that you have some information on what a Short Sale is, you as a home owner must realize the importance of beginning the short sale process immediately. Due to the recent decline in property values it has created many challenges for homeowners. However, the short sale is the answer for all parties involved, and can benefit the home seller, home buyer and the lender.

The nationwide rise of defaulted mortgages and foreclosures is an opportunity for experienced real estate agents to help homeowners, during a very emotional time. Most experienced Realtors who work with Short Sales have a plan that provides everything the bank is looking for to help prove to the bank the property qualifies as a potential short sale and all the documentation the bank is going to want to see.

If you're a homeowner who is behind on their monthly payment or who has had a major change in earnings and considering a short sale contact The H Team today for a free consultation.

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