A bank short sale is one option lenders offer to help homeowners save their home from falling into foreclosure. Although the process is complicated, this alternative can offer struggling borrowers an opportunity to break free from the financial constraints of owning a home.
Bank short sale properties come in all sizes and price ranges. Lenders can grant approval for single family homes, condominiums, commercial real estate and vacant land. When borrowers fall behind on their mortgage payments and do not possess the financial means to get back on track, lenders may allow them to participate in this type of arrangement.
Short selling requires lender approval. This type of real estate transaction is generally handled by the lender's loss mitigation department. It involves selling the property for less than the borrower owes on their mortgage loan.
Most banks require short sale properties to be sold through a licensed realtor. Occasionally, banks will allow homeowners to list their property as "For Sale by Owner." The home must be sold within a set period of time established by the lender.
Not all banks participate in short sale transactions. Those who do, have strict guidelines in place which must be adhered to through the process. If borrowers do not follow protocol, lenders can consent with foreclosure action.
Real estate experts claim foreclosure costs banks approximately $ 60,000. By engaging in short sales, mortgage lenders can recoup some of their financial losses and avoid expense legal fees associated with the foreclosure process.
For individuals facing foreclosure, a bank short sale can be the answer to their prayers. Entering into this agreement does not allow borrowers to keep their home. Short sales have a detrimental effect on credit reports, but not quite as damaging as foreclosure.
Once lenders grant short sale approval, borrowers must submit a packet of information including financial documents, tax returns and a short sale hardship letter. This letter is of particular importance because it allows borrowers to detail events which caused them to become delinquent on their mortgage note.
Each lender establishes their own protocol for handling short sale transactions. Since the bank is taking a loss on the property, the borrower must prove they do not possess the financial means to make good on their loan. The process generally takes three to six months to complete.
Bank short sales are one of the few options that allow homeowners to avoid foreclosure. It is best to work with a real estate professional that possess experience with short sale transactions. Homeowners who need to sell their property quickly should consider seeking out private real estate investors who purchase homes with cash.
Cash deals can expedite the short sale process. With the current credit crunch, many investors are purchasing homes with cash because they can not obtain traditional financing. Local real estate investors can be found by typing in the name of your city and the phrase "real estate investors" using your favorite search engine.
Another way to locate private investors is to search for real estate investment networking groups. Attend meetings and network with members. Additionally, the classifieds section of newspapers and real estate magazines.
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Source by Simon Volkov