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ARTICLE - Short
Sales Update - Know Before You Go! by
Robert Poe Portland, OR - An
increasingly common term heard out there in
residential real estate and now even into
investment real estate markets is “short sale”.
It has the aura and status of being an end all
of the housing problems, if you believe the
hype.
In reality, all a
short sale means is that the lender takes a
haircut or a loss on the loan made to the
borrower. The equity (if there was any to start)
that the owner has is gone, and the property has
been sold to a buyer that is independent of the
former owner. The borrower walks away with no
money, but his or her credit report is somewhat
intact and the former owner can continue on with
life. The bank then has the loan off their books
and they can move onto the next problem loan.
A short sale is a
complex process. You need to understand that
you, as the owner of the house that the short
sale is being executed on, no longer have the
ability to decide on an offer when it is
presented by a potential buyer. The bank or
financial institution is now the third party
that decides whether an offer is accepted or
not. This is a key knowledge point and sometimes
it is a hard reality the owner must face.
From an agent’s
standpoint that has the short sale listing,
there are many small, complex steps that make up
a short sale. They are too numerous to mention
here, but suffice it to say a majority of the
agent’s time is spent coordinating all the
competing interests involved in the deal.
The upside is
that you may be able to avoid a foreclosure on
your credit rating and all the associated
fallout that goes with that scenario. A short
sale is a second chance, and worth considering
if you have hit difficult financial straights.
A short sale is
not a panacea for all troubles and there is NO
guarantee that one can even be executed in all
cases. A wise decision is to seek legal counsel
and then the services of a short sale real
estate specialist who is adept at negotiating
with banks. Remember, this is only one avenue to
remedy financial difficulties and should be
approached with your eyes open to the reality of
your situation.
As an investor,
this is an area worth considering if you want an
entry into an area for a bargain price.
Understand though that the sales are usually
as-is and you as the buyer assume the risks.
Also, there is a great deal of competition for
these houses with groups of insider investors
pooling money and resources to buy them up.
Still, there are some outstanding bargains out
there and a knowledgeable real estate agent can
find them for you. We are seeing more commercial
distress properties out there as well, but so
far nothing rivals the numbers of residential
properties available as distress sales.
- Submitted by
Robert Poe, CCIM, Certified Short Sale
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