The Truth About Short Sales
What is a short sale?
By definition a short sale is the sale of a real estate property for a value below the balance owed on the property’s loan. Second to the seldom approved loan modification in this economy, a short sale is the next best option for home owners that struggle to meet their payments. However, there are pros and cons that any home owner should be aware of.
How does a short sale work?
The proceeds of a short sale are collected by the lender to repay the debt from home owner’s loan amount. As of January 1, 2011, the California Legislature passed Senate Bill 931, with the addition of Section 580(e) to the California Code of Civil Procedure. This addition was beneficial to home owners of one to four unit residential properties with a first deed of trust, as long as no fraud or waste has been committed by the owner. Under this addition, qualified individuals that are approved to short sale may have any additional debt from the remaining balance of a short sale loan forgiven. Home owners should still be aware of the inevitable impact on one’s credit with performing any such agreement. This impact may be prominent for anywhere from two to five years. However, the addition of the section that forgives additional balance liability and the shorter, less prominent impact on one’s credit with a short sale are two reasons why a short sale may be beneficial.
What are some complications of a short sale?
Home owners beware, however. Despite the benefits of a short sale, recent statistics show that 43% of short sale attempts do not close. The process of a short sale is extremely complex, requires persistent follow-up, and immense attention to detail. Because of this, home owners should make sure they are working with a trusted source that is diligent and well-educated on the constantly evolving area. With an investment as valuable as one’s home at stake, it is advised that home owners do their research and make sure they are working with a competent, well-trained, and specialized agent.
How can I learn more?
For more information on short sales or to find out if you qualify, feel free to contact me.
Wealth Realty (626) 600-2307 or email at email@example.com.
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