Being unable to pay the loan or mortgage payments on your property can be a scary feeling. There are many different strategies that investors have used to help struggling land owners get from underneath their debt, and a short sale is one of the more popular methods.
Definition
Video of the Day
A short sale is the sale of a property in which the lender accepts less than what is currently due.
Video of the Day
Benefits
Given that the investor interested in the discounted property has the reserves or credit to engage in the sale, a short sale is quick, and most of the negotiation is done between the investor and the lender. In addition, the defaulting owner may not have to pay the balance between what is owed and what the property sold for.
Effect on Credit Rating
A short sale will show up on the owner's credit report; however, the damage may not be as bad as a foreclosure. More than likely, the lender will report that she defaulted on a loan, rather than on a mortgage, allowing her to purchase another house from a different lender should she meet their requirements.
Qualifications
An owner must have fallen on bad times, have no assets, her mortgage must be in or near default status, and her property's value must have dropped. The lender will ask to see copies of bank statements dating back at least six months and will probably investigate any other assets.
Where to Begin
Whether looking to invest in short sales or trying to find an investor for your property, talk to a real estate agent first. He will be your best lead.