A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than what the property can be sold for. Short sales are a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling with lender.
Let's say you have $200,000 left to pay on your mortgage, and you get the bank to accept an offer from a buyer for $180,000.
The bank allows this transaction to take place because selling the home now for less money may work out better for them than if costs were incurred for the bank to sell the home if you went into foreclosure.
Cash benefit - The property is available at 30 to 50% discount as the Lender wants to recover their loan amount and they do not have any profit making motive.
No Legal Hassles - There are no legal hassles when buying a foreclosure home through banks or government departments as all the legal formality has already been taken care of these institutions in a professional way.
Furnished House - Sometimes you may get a fully furnished house and you save a lot of time otherwise involved in furnishing of the house. Only minor repairs may be required which is very minute.
Good Locality - You can find a foreclosure home in good locality which would have been difficult otherwise to purchase a home in already developed area due to high rates or unavailability of land.
Easy Loans – When you are buying a foreclosure home through bank foreclosures they offer you easy loan facility from their bank. The process of getting loan is easy as the bank will also have dual benefit of selling a foreclosure home, which is their liability and also getting a client for taking loan for a safe transaction.
6. Lower interest rates - You may get the loans at lower interest rates from several banks to buy foreclosure homes.
When you purchased your home, chances are you took out a home loan and your lender took a security interest in the property.
In the event that you cannot make your mortgage payments, this security interest gives your lender the right to foreclose--auction off your house and keep the proceeds in order to recover its investment.
And, if your property cannot be sold for what is owed, a deficiency judgment could be pursued against you.
WHY BANK PREFER A SHORT SALE OVER FORECLOSURE?
If a bank receives an offer that is close to market value the bank may be more likely to accept that offer instead of foreclosing.
The reason is after foreclosure, if the bank wants to sell the home, it is unlikely to receive a higher offer than the short sale offer on the table.
While purchasing a short sale property can at times be a complex and time-consuming process, it can also be a highly profitable investment opportunity.
By working with us you can leverage our network, relationships, and expertise in driving and managing the negotiation process so that you can focus on what you do best: investing in distressed property situations.
By joining our network, you will gain access to our proprietary pipeline of attractively priced properties from motivated sellers, and the opportunity to purchase these properties before they even hit the market.
Our objective in every short sale negotiation is to quickly get the property sold for the highest possible price in order to minimize the lender's loss and the homeowner's liability, and to thus avoid the costlier option - both financially and time-wise - of foreclosure. The lender not only helps in making short sale process but also minimize losses.
It provides solutions and services for best price deals and helps in seeking potential buyer for our property .If for whatever reason you are currently behind on your mortgage payments - or foresee that you will soon be unable to continue making your payments.
A loan modification is a permanent change in one or more terms of a home loan that results in a more affordable monthly payment. A delinquent loan is brought current, and the interest rate may be lowered, a longer term offered and sometimes a reduction in the principle balance. A successful loan modification should offer the homeowner an affordable and sustainable monthly loan payment.
A moving and convincing letter of hardship from you is very vital in order to have your mortgage modification application approved by the lending authority.
You may represent your loan modification case if you can (do it yourself loan modification), or else you may approach a professional who will guide you and help you prepare all the necessary documents by charging a nominal fee for the services rendered.
The aforementioned tips on the Loan Modification Process should be able to help you if you are one of the many borrowers who are in need of modifying a mortgage loan.
( An effective hardship letter sticks to the facts and is concise, straight-forward, and relatively simple. It is not a good idea for the homeowner to blame the lender for their problems. It is a good idea to highlight how they have exhausted all options available to them to repay their lender)
1.Searching the properties which can be short sale, and marketing to get registered properties at our website. 2. After registration our representative will go personally to home owner will suggest him possible solution . 3. Collecting all information of homeowner. 4.Searching suitable real estate consultant for homeowner. 5. Now through our website we will search potential buyer for that property as well as broker. 6. Home visit with Potential buyer. 7.submitting the offer for short sale to lender/banker .
7. Negotiation with banker for best price and lower interest rate. 8. Making legal documentation and related formalities.
Home Affordable Foreclosure Alternatives Program (HAFA)
Last week the Treasury Department announced the Home Affordable Foreclosure Alternatives Program (HAFA) the latest program under the Home Affordable Modification Program (HAMP), designed to offer alternatives to homeowners facing foreclosure.
The Home Affordable Modification Program is designed to help as many as 3 to 4 million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use.
Borrower eligibility is based on meeting specific criteria including: 1) borrower is delinquent on their mortgage or faces imminent risk of default 2) property is occupied as borrower's primary residence 3) mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties.
After determining a borrower's eligibility, a servicer will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower's total pretax monthly income:
First, reduce the interest rate to as low as 2%,
Next, if necessary, extend the loan term to 40 years,
Finally, if necessary, forbear (defer) a portion of the principal until the loan is paid off and waive interest on the deferred amount.
The Home Affordable Foreclosure Alternatives Program provides financial incentives to loan servicers as well as borrowers who do a short-sale or a deed-in-lieu to avoid foreclosure on an eligible loan under HAMP . Both of these foreclosure alternatives help the lender out by avoiding the potentially lengthy and expensive foreclosure proceedings and also by protecting the property by minimizing the time it is vacant and subject to vandalism and deterioration. These options help out the borrower by avoiding the foreclosure process and the uncertainty that comes with it and allows the borrower to negotiate when they will give up possession of their home as well as, under the HAFA program be released from any further liability from the loan including short-fall and deficiencies.
Under a short sale, the lender will allow the homeowner to list and sell their home just like they normally would but with the understanding that the amount of net proceeds realized from the sale may not be enough to pay off the loan in full. Under the HAFA program all short-sales have to be arm’s length (no selling it to your kids or relatives) with ALL net proceeds (after paying commission and normal closing costs) going to the lender to be applied toward the mortgage on the home. Under this plan the lender accepts this lesser payoff amount in FULL SATISFACTION of the total amount due on the mortgage, meaning you are off the hook for the balance
Under a deed-in-lieu the homeowner voluntarily transfers ownership of their home to the lender in FULL SATISFACTION of the total amount due on the mortgage. The lender is not going to be willing to accept a deed to the borrowers property unless the borrower can deliver marketable title (meaning you must not have other liens against the property) and generally then only after the homeowner has made a good-faith effort to sell the property.
Under the HAFA program, if your lender does a short-sale or deed-in-lieu with you, they may not require you to make a cash contribution, ask you to sign a note for the short-fall or deficiency, nor sue you for any remaining amounts owed (again, it is important to note this is not true in ALL short-sales and deeds-in-lieu.
The property must be the borrower’s principal residence
The mortgage loan is a first lien mortgage originated on or before January 1, 2009
The mortgage is delinquent or default is reasonably foreseeable
The current unpaid principal balance is equal to or less than $729,750 (for single-family home…higher amounts for 2 to 4 unit dwellings)
The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income.
The directive also states that every potentially eligible borrower must be considered for HAFA BEFORE the borrower’s loan is referred to foreclosure or the servicer allows a pending foreclosure sale to be conducted.