The Short Sale Process - understanding the Short Sale Process

Homes For Rent In Marietta Ga - The Short Sale Process - understanding the Short Sale Process

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When housing prices in many parts of the country were booming a join of years ago, there wasn't much national concentration given to short sales. But with the current subprime debacle and increasing mortgage delinquencies, many habitancy are wondering if the short sale process is a way to avoid foreclosure.

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Homes For Rent In Marietta Ga

Basically, the definition of the short sale process is when the lender of a asset allows the asset to be sold for less than the number due on the mortgage loan.

The determined advantage to the short sale process is that it allows the wholesaler to avoid the reputation article damage associated with a foreclosure. A foreclosure can stay on your reputation article for up to 10 years and can take an emotional and financial toll on you and your family.

But the pitfalls of the short sale process should be carefully as well. The I.R.S. May reconsider any debt forgiveness as taxable income, thus resulting in a tax liability. In addition, lenders can often pursue a borrower for the insufficiency equilibrium (the contrast between the number owed and the number paid).

In some cases you may be able to avoid taxation if you can prove you are insolvent. But if insolvency is unsuccessful, and you are faced with a tax liability resulting from the insufficiency amount, it may make more financial sense for you to let the lender foreclose.

The Short Sale Process

The short sale process can vary, but it will commonly work as follows:

1) The lender is contacted to discuss the possibility of a short sale and to settle the lender's process for completing the sale.

2) The wholesaler issues a letter authorizing the publish of personal facts about the loan and the asset to the buyer or escrow agency.

3) The lender will characterize a community statement, which will indicate the proposed selling price, remaining loan balances and itemize all expenses, including real estate commissions and other fees and expenses associated with the closing.

4) The wholesaler will perfect a "hardship letter," which will information and explain all financial difficulties. Lenders will commonly want to validate the seller's financial situation by seeing at bank statements, investment accounts, along with examining paystubs and other financial records.

5) The lender will then look to the broker to furnish a price understanding by examining the condition of the house and the store value of comparable properties.

6) The lender will then want to survey the purchase agreement to settle if all amounts are inexpensive and the real estate commission is acceptable.

Because of the documentation required, the short sale process can be lengthy. But if done correctly, it can work well for all parties involved. The lender avoids the uncertainty of the foreclosure process, the wholesaler avoids a foreclosure on his or her reputation article (along with potential bankruptcy), and the buyer hopefully got a good deal on a property.

Considering the complexity of the short sale process, you must be educated. If you are inspecting a short sale, make sure that you discuss your situation with a competent lawyer and accountant. The more educated you are on the process, the easier the transaction will be, and the great the impression you will make on the lender.

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