Real estate short sale is an unpleasant experience for an owner
The term 'real estate short sale' is being bandied about more and more as of late. Real estate short sales serve as an alternative to foreclosures in an increasingly declining real estate market. The time it takes to sell a property is extremely high, and the prices on real estate have reached a considerable low. Throughout the country the crisis is so bad that many places are experiencing what is fair to call a market meltdown. It is because the market is so inhospitable that the need for short sale real estate has gone up so dramatically.
What is a short sale, you might ask? A real estate short sale is the name given to the process where banks allow properties to be sold for less than the amount owed to them. There are two conditions that must be met before a bank is likely to approve this: Firstly: Market values are such that the property's sale price cannot cover the outstanding mortgage balance(s). A further condition is that the owners of the property must not be able to continue making mortgage payments on the property.
As an example, suppose a property was purchased five years ago for 217,000 dollars with an adjustable rate mortgage. Let's say that two years after purchasing the property the owners took out an additional 10,000 dollars second mortgage, which means that today the owners owe 227,000 dollars on the property. Also, we have to remember that in five years, the amount of time that the mortgages have been paid off is negligible.
Remember that in five years the amount that the mortgages would have been paid off is negligible. In the same amount of time, the market values for similar properties are going for 215,000 dollars, while the adjustable rate has risen from 7 percent to 11 percent. Additionally, we end up with a real estate short sale situation once one of the owners has lost their job.
The bank may decide to save expenses and time delays that a foreclosure would cost by simply allowing a short sale. The reason is that it is far better to have a definite amount of money know and the property off the bank's books than waiting on an unknown amount of money at some unknown point in the future. If the lenders and owners do not agree on the terms of the sale, complications can result, but in general, that is how the real estate short sale works.
A real estate short sale is not a very pleasant experience, but it certainly isn't the worst experience they could have. If nothing else, it certainly beats being forced to accept a foreclosure on your credit report. These short sales can give the smart real estate investor a great buying opportunity.
What is a short sale, you might ask? A real estate short sale is the name given to the process where banks allow properties to be sold for less than the amount owed to them. There are two conditions that must be met before a bank is likely to approve this: Firstly: Market values are such that the property's sale price cannot cover the outstanding mortgage balance(s). A further condition is that the owners of the property must not be able to continue making mortgage payments on the property.
As an example, suppose a property was purchased five years ago for 217,000 dollars with an adjustable rate mortgage. Let's say that two years after purchasing the property the owners took out an additional 10,000 dollars second mortgage, which means that today the owners owe 227,000 dollars on the property. Also, we have to remember that in five years, the amount of time that the mortgages have been paid off is negligible.
Remember that in five years the amount that the mortgages would have been paid off is negligible. In the same amount of time, the market values for similar properties are going for 215,000 dollars, while the adjustable rate has risen from 7 percent to 11 percent. Additionally, we end up with a real estate short sale situation once one of the owners has lost their job.
The bank may decide to save expenses and time delays that a foreclosure would cost by simply allowing a short sale. The reason is that it is far better to have a definite amount of money know and the property off the bank's books than waiting on an unknown amount of money at some unknown point in the future. If the lenders and owners do not agree on the terms of the sale, complications can result, but in general, that is how the real estate short sale works.
A real estate short sale is not a very pleasant experience, but it certainly isn't the worst experience they could have. If nothing else, it certainly beats being forced to accept a foreclosure on your credit report. These short sales can give the smart real estate investor a great buying opportunity.
posted by Debt Consolidation Loan at
8:06 AM
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