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SS are much more preferred now than foreclosures, more convenient and much hassle-free than the previous one. Home, Real Estate Denver, Short Sales Colorado
First is to make a short sale offer with a strong earnest money deposit amounting to 1% up to 3% the sales price. It speaks volumes that the buyer is serious about the sale. The minimum down payment for FHA loans is 3.5% of the purchase price and the earnest money is part of that down payment.
The second is to agree to put it into a trust account. It just shows that the buyers are really committed to the transaction because some of the real estate contracts call for the earnest money deposit to be placed into a trust account upon short sale approval. Sellers will most likely want to see that buyers put their money where their mouths are.
The third is to check the comparable sales in the market. Although some short sale listings are deliberately priced under the market value to attract buyers, many banks will only approve short sale that is priced between 5% and 10% under market value. So to save time find those who are reasonably priced under the market.
Fourth, before making an offer, call first the short sale listing agent. The agent must have received several offers and your offer may need to be priced much higher than the list price. Verify that he hasn’t accepted and already sent an offer to the bank or else you may be wasting your time.
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In the wake of the mortgage meltdown, many and many Americans are now facing the real threats of foreclosure. Losing ownership of one’s home not only destroys your credit but also degrades and embarrasses the whole family. However, Americans have found a way to avoid it. They have discovered ‘short sales’ in real estate. It is usually done on stocks and other finance-related transactions but now it has increasingly become popular to avoid the more negative setbacks of foreclosure.
A short sale is a transaction where the seller is selling the house for a price less than the balance of debts incurred from acquiring the house. This is usually done to avoid foreclosures. A short sale is usually a better option than foreclosures but it’s neither easier to process. Not all lenders though may accept short sales and not all properties nor sellers can qualify for short sales. Although, it can be a win-win situation for both parties, one for sellers which prevents their house from being foreclosed which has more negative ramifications than short sale transactions. They could also go back to homeownership if they want. Also, saves time and money for lenders than having it foreclosed which takes years to process. Beneficial for buyers too because they could get the house for a discounted rate, although, it could have some drawbacks. To be sure they should ask for legal advice from experts and ask accountants of some tax ramifications in doing short sale process.
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Even if short sales are much more preferred now than foreclosures, it doesn’t mean it is any more convenient and hassle-free than foreclosures. It has also negative ramifications. Let’s just say that it is considered as the ‘lesser evil’ if compared to a foreclosure. For the owners or sellers, it could mean an overall drop in their credit score of up to 200-300 points. This is according to Elizabeth Weintraub of About.com. The home-owners, because of their credit standing, may find it difficult to acquire a new mortgage because of their short sale history. The lender or bank may reject and prohibit them from doing so.
It’s very unfortunate for the homeowners to face these tough choices but in order to survive the crisis, you gotta do what you gotta do
All of which have negative impacts on one’s credit risk. If you want to make a choice you must understand all the risks and legalities involved with short sale transactions. Ask for the advice of those who know better and focus on your goal to end the pain, accept the consequences, learn from the experience, move on with your life, and most importantly rebuild your credit standing through positive financial education.