condo
How Do Short Sales Work?
September 1, 2010 by Financemyhome · Leave a Comment
By Andy Asbury
A Short Sale in Real Estate is a transaction in which a seller owes more money on a property than a buyer is willing to pay and the seller’s lender mediates to allow for the sale to occur. Technically, “short sales” pertain to conventional mortgage loans. Lenders use the phrase “pre-foreclosure sale” in reference to FHA loans.
I am a real estate agent focused on the downtown loft and condominium market in the Twin Cities of Minnesota. Fortunately, short sales are a fraction of home sale totals and are less common in the downtown market than in most areas across the metropolitan. However with current market conditions no area is immune to short sales.
If you are unable to make monthly payments on your mortgage for any reason, contact your lender to learn specific details about the process. Familiarity with the steps involved will help you think through the option rationally. It can be difficult to consider selling a home you have invested in heavily, both financially and emotionally. If you currently are unemployed, you probably spend more time at home than you ever have before. In a cruel paradox, this increases your emotional attachment to this home!
However, a short sale might become the best option if it allows you to move forward with life once again. As part of its formal process, your lender will collect many documents from you. These might include a hardship letter, a listing contract with a real estate firm, detailed personal budget statements, and copies of recent pay stubs and bank records.
Interestingly, hardship can include job relocation which often pertains to the condominium market. A large segment of condo dwellers are more prone to relocation since they tend to be young professionals looking to advance their career and generally have fewer people in their households which would directly by affected by the life change.
In the best case scenario, once you get an offer, your loan company will accept that amount in lieu of the loan payoff amount. It may even do so after subtracting your selling expenses.
Be forewarned that some lenders have better and more straightforward processes than others. Some realtors specialize in short sales because the transactions can become so complicated. Even after a sale is closed, questions can linger whether the debt was fully released if the seller was not educated thoroughly.
Other minuses: Experts say, a short sale can damage your credit rating between 75 and 100 points. Also in some cases, the amount of money written off may translate into 1099 income, in other words, taxable income. Though unpleasant, it could be preferable to owing the entire loan amount.
The down turn in the housing market can mean it is a good time to investigate the Minneapolis real estate market as a buyer. If you are ready to look for Minneapolis condos for sale, team up with Lofts and Condos Realtor Andy Asbury for expert advice and insight via http://www.minnesotaloftsandcondos.com today.
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