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Landlord Guide Short Sale Foreclosure
Through a “short sale”, the landlord or rental property owner typically hires a real estate broker to find a buyer to purchase the home for its current market value, even if that value is less than the homeowner’s unpaid mortgage loan balance.The homeowner asks the lender to accept the sale amount as full payment of the mortgage loan because that is the current market value of the home and more than the lender would likely receive if the home was sold in foreclosure.
By accepting a “short sale”, the lender or its servicing agent saves all of the costs of foreclosure and avoids the risk of receiving a lower offer through the foreclosure sale or seeing the property decrease in market value prior to the foreclosure sale.
“Short sale” – Quick Tips
- Because it takes time for a real estate broker to find an appropriate buyer, you should proceed to negotiate the terms of a “short sale” with your lender or its servicing agent before the lender records the NOD. However, some lenders or their servicing agents will decline to negotiate a “short sale” until a qualified buyer makes a specific offer. After recording the NOD, your lender or its servicing agent may pursue foreclosure regardless of your desire to find a buyer and complete a “short sale”.
- The sale price of your home should take into account money for a commission to your broker as well as title, escrow, other fees, and selling expenses. You should look for a licensed real estate broker with “short sale” experience. If reported by the lender or its servicing agent, participation in a “short sale” is noted in your credit files, but it likely will be less damaging to your credit standing than a foreclosure. It is worth noting that a “short sale” does not automatically bar the lender’s ability to pursue you for the difference in the amount owed and the sales price. Before agreeing to a “short sale”, you should get in writing whether the lender intends to forgive the debt, which may lead to a taxable event (see discussion on “Understand What Your Lender or its Servicing Agent Can Reasonably Offer”) or if the lender intends to retain its rights to pursue civil action to collect the deficiency.
You might also want to read:
- Landlords and Rental Property Owners Guide to Sixth Procedure in Foreclosure When the landlord’s or rental property owner’s home sells at the foreclosure sale, the lender or its servicing agent may elect to accept the sale proceeds as payment in full.......
- Landlords and Rental Property Owners Guide to Fifth Procedure in Foreclosure Upon completion of the prior 3 events, landlord or rental property owner’s lender or its servicing agent can direct the trustee to prepare a NOS (including scheduling a foreclosure sale).......
- Landlords and Rental Property Owners Guide to Third Procedure in Foreclosure When the initial three month reinstatement or cure period ends, landlord and rental property owner’s lender or its servicing agent can move forward and direct the trustee to schedule the......
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Very well laid out article on the subject of short sales and foreclosures. You started with defining certain words and ended with quick tips. It helped me alot as an investor and landlord understand what exactly is involved. As a blogger it gave me a clear idea of how to write future posts.