What You Should Know About Short Sale

July 22, 2009 | Filed Under Investing

by Don Burnham

Sometimes the owner of a property is no longer able to pay the mortgage or deed of trust. When this happens, foreclosure often follows -or worse: bankruptcy. But there is an alternative, the short sale.

The short sale is the last option taken by the lender. When a lender signs a short sale, they are forgiving a certain amount of debt, and considering the loan paid in full.

State laws vary, so consult your real estate lawyer to determine if your loan and case qualifies for a deficiency judgment or claim for a short sale.

The amount of time for a short sale to get approved is difficult to guess. In other words, the short sale process is long and tedious. The lenders in short sales business usually say that it takes 21 days time for the approval to come through.

The tedious process of securing a short sale is sure to take a very, very long time. 21 days is the usual answer, should you ask the lender. But that’s just a minimum, some cases may actually take twice that time to get approved.

Short Sale Strategy Overview

How the Short Sale works:

The Contract: The contract can be of any variety-a one page, a nine page, a board of realtors’ version, or any generic type of purchase and sales contract. However, at any point in the contract in which price is mentioned, you should fill in the phrase: “See Addendum.”

The Addendum- Your Most Important Tool

This is the most important piece of paper in your entire manual! Let’s review the Addendum in detail. The first section on the top is just generic information pertinent to the specific property:

Origination of the contract

Date

Names of the parties involved

Address

Tip: It’s advised to list both the legal address and the simple address in the addendum -for the purposes of clarity and transparency.

Any investor, who wants to make money in the foreclosure market, should always consider that a short sale could still bring him a bargain property.

About the Author:

Know about short sale an alternatives to bankruptcy or foreclosure only at Don Burnham’s website http://www.weknowthewayback.com. Visit today to know all about short sale!

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