What Is Short Sale In Real Estate?
A "short sale" is when you negotiate a lower than the current balance payoff on a mortgage or contract for deed (land contract). This is a very involved process and far beyond the scope of this short article, but we will present an overview of it here.
When lenders are faced with taking property back through foreclosure, they are often facing substantial losses. These losses include far more than just money lost on the foreclosure and resale of the property. They include paying a staff to manage the foreclosed property, paying attorneys, paying the costs of holding property for months and paying the costs of marketing the property. Lenders are often willing to take far less than they are owed, if it means they get the money now and can cease their expenses that are accruing against the property. This process is call loss mitigation. There are some circumstances, however, that will determine whether or not they will discount their mortgage.
First, generally, lenders will only discount mortgages BEFORE the sheriff's sale has taken place. In States where there are High foreclosures, they will take short sales after the sheriff's sale. Michigan is good example of this. Second, they will usually only discount their mortgages upon a hardship request of the Mortgagor, not a third party, and especially not an investor. Exceptions to this again would be where a State like Michigan has high foreclosures %. The mortgage company holding mortgages in Michigan already knows the major of their buyers will be investors. Currently Michigan, Florida, Texas, Ohio and California make up 50% of foreclosures in the country.
Since we started working with short sales, we have achieved having mortgages discounted by 70% or more. Especially second mortgages, which upon completion of the foreclosure of a first mortgage will lose everything, are prime for this process. This has turned many properties that we would normally have passed up into viable investments. For more information on the foreclosure process goes to http://www.MrLeaseOption.com and check out Foreclosure Boot Camp Product. This is good for Michigan.
A "short sale" is when you negotiate a lower than the current balance payoff on a mortgage or contract for deed (land contract). This is a very involved process and far beyond the scope of this short article, but we will present an overview of it here.
When lenders are faced with taking property back through foreclosure, they are often facing substantial losses. These losses include far more than just money lost on the foreclosure and resale of the property. They include paying a staff to manage the foreclosed property, paying attorneys, paying the costs of holding property for months and paying the costs of marketing the property. Lenders are often willing to take far less than they are owed, if it means they get the money now and can cease their expenses that are accruing against the property. This process is call loss mitigation. There are some circumstances, however, that will determine whether or not they will discount their mortgage.
First, generally, lenders will only discount mortgages BEFORE the sheriff's sale has taken place. In States where there are High foreclosures, they will take short sales after the sheriff's sale. Michigan is good example of this. Second, they will usually only discount their mortgages upon a hardship request of the Mortgagor, not a third party, and especially not an investor. Exceptions to this again would be where a State like Michigan has high foreclosures %. The mortgage company holding mortgages in Michigan already knows the major of their buyers will be investors. Currently Michigan, Florida, Texas, Ohio and California make up 50% of foreclosures in the country.
Since we started working with short sales, we have achieved having mortgages discounted by 70% or more. Especially second mortgages, which upon completion of the foreclosure of a first mortgage will lose everything, are prime for this process. This has turned many properties that we would normally have passed up into viable investments. For more information on the foreclosure process goes to http://www.MrLeaseOption.com and check out Foreclosure Boot Camp Product. This is good for Michigan.
Labels: What is a short Sale
posted by Ralph Marcus (Mark) Maupin | 6:03 PM
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