Today’s economy does not tolerate ignorant transactions. You have to be on your toes and keep up with the best sale practices to save yourself from incurring any huge losses. While real estate is a very lucrative market, it is not without its pits and falls. You have to be ever vigilant for bloated prices and mortgage schemes that might leave you footing a loan, which is even costlier than the price of your house. Here is a quick guide to short sales transactions, which is the most appropriate solution in this case.
What are short sales?
When you are stuck in a deal where the mortgage rates are higher than your house, it sometimes is ideal for an arrangement between your lender and yourself to come to terms with a solution that is comfortable for both of you. You can come to a mutual agreement to sell your house for an amount, which is lesser than your mortgage balance. This is sometimes also applied if the homeowner has to move out of the country or state for some reason and needs and both parties cannot wait for the risk of a foreclosure.
Hefty advantages to short sales
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Advantage for the seller- The obvious advantage for the seller is that they can get out from under the burden of an uneven mortgage loan. It is also a huge relief to tie up loose ends in case they have to shift out of the country or state. With the short sale taken care of, they can just move on to the relocation without having to come back again to the city just to deal with the foreclosure or eminent sale.
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Advantage for the buyer- The biggest advantage for the buyers is that they can find some of the best bargains when shopping short sale. There are a few hassles associated with such, sale and you have to be extra vigilant for all the terms, and conditions that come attached to the deal. However, this is a case for every kind of house sale and if you like the home, it should not be any issue at all.
What are the most common risks associated with short sales
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Risk of the lender suing you- If you do not come to a mutual agreement with your lender prior to the arrangement, chances are such a transaction might be viewed as a bad faith. In this case, to protect his own interest, the lender might sue you against the mortgage balance in charges that you are attempting to dupe him.
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Risk of the IRS levying extra tax on the mortgage balance- In some case, even if you have a mutual agreement with your lender and the extra balance is ‘pardoned’ so to speak; there is still the IRS issue to handle. IRS might consider the extra mortgage balance as your additional income and issue a tax against it.
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Risks of junior liens- Even if you are in mutual agreement with your lender, you still have to deal with the other debts that you might have secured against the property. These are considered the junior liens and they might not be at all comfortable with this kind of transaction.
- Credit score jeopardy- For many credit-scoring companies there is hardly any difference between a short sale and a foreclosure. This transaction might end up as a bad image for credit score in the end.
Five metropolitan areas averaged best for short sales transactions
According to the recent surveys following are the five of the best choices when it comes to short sales transactions.
- Los Angeles short sales
- Phoenix short sales
- Atlanta short sales ( This area has had one of the most rapid growth in short sales transactions over the past 5 years as compared to the most prominent areas in the US)
- San José short sales
- Portland short sales
Author Bio: Charles Jones is a noted author of several distinguished reports and case studies on the niche of Atlanta short sales. Here he shares his expertise on the field with his readers in an effort to make the idea of short sales transactions clearer to them.
