Wednesday, April 8, 2020

Short Sale and Foreclosures

What is a Short Sale in Real Estate? A Short sell is selling a home for less than the loan balance on what you owe the bank for the home. The bank must agree to the short sale of the home. For example, the buyer goes to the bank to tell them the home was purchased for $200,000 and the down payment was $50,000. So there's a remaining loan balance of $150,000 but the market is willing to pay $120,000 for the home.  The individual looking to short sale the home tells them their hardship maybe a job loss or loss or spouse that has reduced income. The bank may be open to forgiving the remaining balance of $30,000 after the short sell.

Borrowee should seek to not have this reported on their credit and may or not have to pay property tax on the remaining balance if it is forgiven.

What is a Foreclosure property? When a homeowner falls behind on their mortgage payment and cannot reach an agreement with the bank through a Short Sell, Loan Modification or loss mitigation the foreclosure process will begin after several notifications.

Depending on the State the sale can be conducted through the State, Courts, Trustee or County
The property will be sold by the highest bidder. Who must pay in certified funds, when the buyer purchases foreclosed property they are responsible for the liens and taxes.

Buyers should find out as much as possible about the property prior to purchasing the foreclose property such as uncovering any liabilities that may be associated with it.