What happens when people are unable to meet their mortgage payments and are facing foreclosure? Most of them prefer to carry out foreclosure short sales. Short sales or shorted sale is when a property owner decides to sell their home in order to prevent foreclosure. This is to maintain a good credit score. No one wants a foreclosure in their credit history. Most lending institutions will give the property owner a chance to sell their property first in order to avoid the hassle of having to go through the foreclosure process. After all the lenders are in the business of money and not selling property.
This is where, you as an investor or potential buyer might get lucky. Most property owners will sell their property far below the market price as they are trying to raise money fast. They have been given a limited period of time to sell by the lending institution. Therefore, they will be looking to close a deal fast.
Again, most property owners will sell to make up the difference they have been unable to pay, therefore, their price will be below the market value. The lenders usually allow property owners to sell below the amount of outstanding mortgage payment owed. This enables the owners to put their property in the market at a discount, making it cheaper. In most cases the appraised value of the property is not considered, but just the mortgage owed. So if the property’s market value is quite high than the mortgage owed, you are in luck.
Most property owners who want to carry out a shorted sale will advertise in the Newspapers or get a broker to sell it for them. But mainly, they will conduct an auction on their own and sell it to the highest bidder. What this involves is that the property owner will invite as many people as possible to go view the property, let’s say within a week, and then conduct an auction on Sunday night. Therefore, it helps for you to be quick if you want to close in on a sale.
Foreclosure short sales are usually less intimidating than foreclosures. This is because they mainly involve dealing with the real estate agents directly or property owners who will take time to explain to you the details involved.
