Short Sales are No Magic Pill

Short Sales are No Magic Pill

Short Sales are No Magic Pill

There are many in real estate who are expounding that doing a short sale is the cure all or "magic pill" when it comes to foreclosure. This is not really the case.

A short sale has historically been used to assist homeowners who have suffered a financial hardship that has brought changes to their financial situation. These changes may include the loss of a job, unforeseen hospitalization, changing jobs and other things. A short sale means that the lender or bank will accept less than what is really due on the home. Not every lender will agree to a short sale or take a payoff that is discounted. This is especially true if it would make more sense financially for the bank to foreclose. Also, not all home sellers or homes will qualify for a short sale. Lenders or banks will not have sympathy for a homeowner that has engaged in criminal behavior or dishonesty.

Investors in real estate may not be eligible for a short sale because they are investors and investing does not promise a profit and investing has some built in risks. Because of this lenders and banks may not be willing to do a short sale for an investor in real estate.

The process of the short sale is hard to maneuver. There is much research to be done and much documentation to go over. It can also be hard to deal with mortgage holders and lenders. This however does not have to be the case if the seller or buyer has professionals to help them. It is best to get assistance with a short sale from those professionals who are qualified in real estate law, real estate, and income taxes. There are some situations where an alternative to a short sale can be talked about and the owner of the home can be spared the distress of losing their house.

Short sales can be a good situation for buyers, seller and financial institutions if the sale is handled by real estate agents, tax advisors, and real estate attorneys that are knowledgeable. The challenge therefore is to find the correct professional team to assist with the short sale. It is best to start with a professional real estate agent and there are certain things to look for.

First, the real estate agent should have a background in business. This background should be in finance, income tax understanding, accounting, and credit and collection. The agent should be able to explain and review all closing documentation. The agent should also be able to explain closing costs for the seller as well as the buyer.

The agent should also be able to analyze cash outflow and inflow as well as have research techniques. Finally, it is paramount that they have a current list of income tax professionals and real estate attorney.

Short sales are no magic pill but if your back is against the wall it may be the best thing to look into. When it comes to foreclosures and your home it is vital to do all of your research you can and look into all of your options.

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