Today’s poor economy has been particularly hard on the housing industry. Many homes are seen with sales signs, either having been foreclosed by the lender or being put up for a short sale. When this happens, in either case, the owner loses all their investment in the property. Short Sales Articles are a must read for owners, lenders and buyers of property.
When a person is in a foreclosure situation they are often offered the option of having a short sale. This means that the owner puts up the house for sale and offers are taken. These offers are less than what is owed and is often the minimal the lender will accept. When this offer is presented to the lender, they have the option of accepting it or going through with the foreclosure.
This type of sale is advantageous both to the bank, or lender, and the home owner. It means that the bank does not have to go through all the requirements, lengthy paper and legal work required when a foreclosure takes place. For the home owner it means that they are out of the loan obligation quickly and cleanly.
Once the mortgage holder is notified that the home owner is going to try to dispose of the property via a short sale they will set a minimal acceptable price. The homeowner notifies a real estate person who lists the property and prospective buyers make a property inspection. Sometimes the buyer can obtain the property for even less than the lender has listed. Real estate commissions are paid out of the sale price.
Banks or other lenders are taking a terrific hit on properties these days. However, when it is obvious that the occupants cannot meet the loan payments some kind of action must be taken. Contrary to public opinion, banks or lenders who loan money on property are just the representatives of investors and they must recover as much money as possible on these properties.
When a market is saturated with foreclosures, as is the current situation, having too many on the market makes them harder to sell, even on a short sale. For the buyer this is an excellent opportunity to obtain property at a low price and, in addition, at a long-term low interest rate. Many banks and other lenders are loaded with properties that once were very profitable and now have a much lower value.
A number of programs have been put forth by the government to try to stem the tide of foreclosures but they have not been very effective. Therefore, the short sale seems the best alternative for the homeowner, the bank or lender and the buyer. Many people, who have the funds, are purchasing homes with this type of short sale as an investment or rental. Eventually, when the economy recovers, home values will again rise and their investment will pay off.
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