Have you ever wondered that what is a ‘short sale’ in real estate?
A short sale in real estate is when a homeowner needs to put up their home for sale, but they are short the money required to pay the mortgage and the fee involved with selling like title, property dealer commissions, etc.
In order for readers to fully grasp the concept of short sales in real estate, Graana.com, Pakistan’s smartest property portal has come up with an informative blog on it.
Following are some of the pros and cons of short sales in real estate.
Now that we have discussed the advantages of short sales in real estate, let’s also talk about some of its downsides.
Following are the steps that you will have to follow to make a short sale.
Before initiating the procedure, struggling homeowners should contemplate the probability of a lender agreeing to work with them for the short sale. There is no obligation on lenders to cooperate.
Your financial trouble should be because of a new thing for example a health issue, sudden loss of job, or a divorce. Moreover, the homeowner is supposed to be honest with the lender. The lender will not show sympathy to a swindling borrower.
To put yourself in a more convincing position, stop purchasing unnecessary stuff. This will make your proposal look more convincing to the lender.
In addition, beware of other factors that might cause a hindrance in the approval of your short sale proposal. In case you have not defaulted on a mortgage yet, the lender will find it difficult to work with you on short sales.
It might give them the impression that they can get more money through foreclosing on your house than through a short sale.
If you think that you are in a situation where you can proceed further with the short sale, talk to the policy-makers at the bank. Don’t just talk to the customer service representatives, instead talk with the lender’s loss reduction department.
Although asking for professional help might cost you a lot of money, however, handling all these complex things all by yourself might put you in much bigger financial trouble. Seek professional assistance from a tax professional, real estate consultant, attorney, and property dealer.
As the sale of your home proceeds, you can pay the fee of each one of these professionals. These professionals frequently deal with short sale transactions, hence they can guide you better through the whole process.
Gather all the required documents that will help you demonstrate your critical financial situation to the lender. It is the homeowner’s duty to come up with the proposal.
However, you need to keep in mind that the lender has to approve your short sale after they have received all the necessary details because the lender is the beneficiary of the returns. Your duty as a seller is to find a buyer for your house.
Once you have found the buyer, and have completed all the necessary paperwork, you are all set to set forth your proposal and the buyer’s offer to the bank.
Together with the documents on your distressed financial status, your proposal must also have an attached privation letter elucidating the situations that are obstructing you from paying your mortgage. Write it with all honesty and try to make it as convincing as possible.
However, there is one thing that you need to be extra careful about, and that is giving your financial information to the lender. In case you deal with them regarding a short sale that is not successful, they might try to mooch you off through foreclosure proceedings.
In case you still have some amount of cash with you, you might be asked to use it for paying off the mortgage payments. This is where an experienced and professional attorney will come to you to let you direct the details.
Short sales may take more time than regular ones, because of the time lender may take before giving approval. Sometimes they fall through as well. The reason can be the buyer finding another property while waiting for an answer from you.
This was all about short sales. Hopefully, this answered your question, “what is a short sale in real estate?”
For more information, visit Graana blog.
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