What is a Short Sale?
• There are many reasons why someone
may fall behind in their mortgage payments. If they
are 3 payments behind, that means that they are facing
foreclosure.
• A Short Sale is a great strategy to use when
a homeowner is behind on their payments and owes close
to, or more than, what the property is worth.
• With the homeowners authorization we contact
their lender and negotiate with the mortgage company
• We are negotiating with the mortgage company
to have them accept less than what is owed as payment
in full.
• Wiping the slate clean for the homeowner in
default
• Providing the investor with a large enough discount
to buy a property well below market value.
Why would a lender
take a Short Sale?
• Mortgage is in arrears or in foreclosure
• The property is in poor condition
• Area market affecting the salability of the
property
• The Homeowner is in a hardship situation and
cannot make the payments
• The banks shareholders are concerned with too
many defaulting loans on the books
• Banks have to answer to their shareholders quarterly,
semi annually and annually. Too many defaulting loans
look poorly in the eyes of the shareholders
• When banks have a loan in default, the Federal
Reserve requires them to set aside 2-8 times the amount
of the loan in reserves for the entire time the property
is in default until the time it sells as an REO (Real
Estate Owned). That is borrowing power they don’t
have!
• When the homeowner is not making the payments
or the taxes, the bank has to cover those payments
• Banks don’t want to own properties, they
want to collect payments
• An REO is a liability, not an asset. Too many
liabilities will cause any business to go under if not
dealt with quickly
• Loss could be greater if they foreclose
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