Considering Short Sales

Sometimes when a person fails to continue the payments on his or her mortgage loan for whatever reason, normally the lending institution will require the payment of the mortgage and any sum that fell in delinquency, and when this does not happen, they will start the foreclosure process.

But a foreclosure process is not as simple as it might seem and the lender can face the need to even loose more money in costly processes such as suing the homeowner and asking a civil court to grand them ownership of the property.

The mere paperwork and legal processes can raise the cost of the property, however, the lending company is required to offer the property at a lower cost than the actual commercial value of the property. This means that the property itself will be worth less and that the additional amount that the company is spending will be lost or should be considered a loss.

Therefore, the lending company will undoubtedly will prefer to recover as much as possible of the initial mortgage loan so for them it will be a lot better to try to salvage the initial mortgage loan instead of having to spend money in the legal processes to remove the current owner.

The legal costs of removing the current homeowner is not the only expense that the lending company would have to do in addition to the initial mortgage payment. The lending company, who will be selling the property for a price that is below the actual commercial price will be adding any repairing, modification and even taxes on the property to the amount that they might be losing.

Therefore a short sale will allow both the current homeowner as well as the lending company to save the most in lost finances as well as being able to recover the most out of the initial investment. While a short sale can be understood in terms of the time that will take you to take over the mortgage loan or even to pay the loan back in full. It is mostly a term that refers to the sale of the house for a lower price not only than the commercial value, but of the main quantity, meaning the real estate loan that was issued in the first place.

The whole idea is to provide the lending company with enough money to make the effort worthwhile in opposition to loosing the amount that would constitute taxes, evictions, repairs and other situations. Of course, while a lending company decides to take on a short sale to cut their loses short, this does not mean that they will “go quietly” and most likely they will emphasize to make a negative statement imprinted in your credit history.

If you are considering on purchasing a property that is about to be foreclosed in a short sale to seal the deal of your life, remember that in this type of negotiation, you are certainly not allowed to negotiate any repairs that the property needs. Therefore, you are taking it “as is” and absorbing any cost that might develop out of a poor property state or maintenance.

If you are not sure about the property or are still hesitant about taking the property in a short sale, then you should consider talking to a real estate agent or even a lawyer. While there are rare cases, a short sale can also put you in a tight spot specially when it comes to paying too much for a worthless property.

Original: Considering Short Sales