Closing a Short Sale – The Basic Things you need to Know

For most homeowners, acquiring their own properties and homes is one of the most rewarding and greatest investments they could ever venture on. However in the midst of the current economic downturn, most homeowners are now faced with the dreadful decision of giving up their properties due to several financial crises in the form of short sales. It could be an awful situation to find yourself in, however there would be no better option to survive the economic uncertainties and its grueling effects. As a matter of fact, it is a more dignified option to take than bankruptcy and even foreclosure.

How does short sale work?

Simply defined, short sale is putting up your house or property in the real estate market with a much lesser worth or price than its original or actual value. There are many factors that would lead homeowners to resort to short sale, the most obvious would be unemployment and being laid off or retrenched from work among others.

The inability to pay for home mortgage and other loans as well as the plunging down of the market value of their property comprises some of the most valid reasons for short sale. Other factors that would be considered in short sale are death, divorce, medical illness or other emergencies and the seller’s lack of other assets to support his payment obligations for the mortgage. This would definitely not suffice the expenses you may have incurred in purchasing the property, but it sure is a much better choice than foreclosing the property for good.

What are the steps to put your homes for short sale?

Even if the homeowner or seller would try to put his property under this category, it is not always ensured that the bank or lenders would approve of its sale. Thus, in order to qualify for short sale, there are first basic steps to comply with.

  • First and foremost, the seller would sign a listing agreement for selling his property as short sale in the presence of a real estate agent and a third-party for approval of such contract.
  • The real estate agent, preferably with experience in short sale, finds a buyer who would be interested in the transaction and make an offer which is then a lesser amount compared to the actual price of the mortgage.
  • Basically, the seller would give his confirmation to such offer and then afterwards seconded by the lender of the seller’s property.
  • Finally, closing the short sale would be culminated with the delivery of the funds by the buyer and the deed delivered by the seller as well as the release of the lien by the seller’s lender.

Closing a short sale has very simplistic and easy steps to deal with and it seems a good and wise choice especially for home buyers. Yet for homeowners or sellers who do not really have much of a choice but to short sale their properties, the government is actually providing many regulations to help them bounce back from such turmoil and dilemma.