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The Short Sale Process

Short sales are purchases negotiated with the owner and lender(s) before foreclosure. Typically the purchase price negotiated is less than the balance owed on the property.

For investors, short sales represent an opportunity to buy real estate below market value and help borrowers avoid foreclosure.

Short Sale Process
Both parties consent to the short sale process, which allows them to avoid foreclosure, which involves more fees for the bank and foreclosure being reported on the borrowers credit report.

This agreement does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.

The bank or mortgage lender agrees to discount the loan balance because of an economic or financial hardship on the part of the borrower.

The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender.

For more information about short sales visit us online at Carlisle Mitchell - Real Estate Tip for Investors.

Understanding Short Sales

Short sales are purchases negotiated with the owner and lender(s) before foreclosure. Typically the purchase price negotiated is less than the balance owed on the property.  For investors, short sales present an opportunity to buy real estate below market value and help borrowers avoid foreclosure.

Short Sale Process

• Both parties consent to the short sale process, which allows them to avoid foreclosure, which involves more fees for the bank and foreclosure being reported on the borrowers credit report. However, this agreement does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
• The bank or mortgage lender agrees to discount the loan balance because of an economic or financial hardship on the part of the borrower.
• The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender.

Short Sale vs Foreclosure

• Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem.
• Banks will incur a smaller financial loss than would result from foreclosure or continued non-payment.
• Borrowers are able to limit damage to their credit history, and partially control the debt.
• A short sale is typically faster and less expensive than a foreclosure.
• It does not extinguish the remaining deficiency balance unless settlement is clearly indicated on the acceptance of offer.

For more information about short sales visit Carlisle Mitchell - Real Estate Tips for Investors

U.S. Foreclosures Hit 8 Year Low

Foreclosure activity across the United States dropped to an eight-year low in May as banks reclaimed fewer homes and foreclosure starts saw their lowest levels in years, RealtyTrac said in a report on Tuesday.

RealtyTrac, which tracks and maintains housing market data, said 109,824 properties across the country were at some stage of the foreclosure process in May. That marked a 5 percent decline from April and left foreclosure activity -- foreclosure notices, scheduled auctions and bank repossessions -- 26 percent below the year-ago level.

Carlisle Mitchell - Real Estate & Investing News

Carlisle Mitchell - Real Estate & Investing News


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Investing in Short Sales

Short sales are purchases negotiated with the owner and lender(s) before foreclosure. Typically the purchase price negotiated is less than the balance owed on the property.

For investors, short sales present an opportunity to buy real estate below market value and help borrowers avoid foreclosure.

For more information about investing in short sales visit us online at Carlisle Mitchell - Real Estate Tips for Investors

Short Sales

Short sales are purchases negotiated with the owner and lender(s) before foreclosure. Typically the purchase price negotiated is less than the balance owed on the property.

For investors, short sales present an opportunity to buy real estate below market value and help borrowers to avoid foreclosure.

Income Property

Income property is property bought or developed to earn income using various investment strategies. 

Income property can be residential or commercial. Residential income property is commonly referred to as "non-owner occupied". A mortgage for a "non-owner occupied" property may carry a higher interest rate than an "owner occupied" mortgage as it is viewed by lenders as a higher risk.

A common practice during periods of home price appreciation is for investors to purchase residential income properties with the intent that rents will cover their monthly expenses for a period of time until the property can be sold for a large capital gain. 

As with all markets during times of fast price appreciation, and as with all market bubbles, investors that enter the market first and get out first usually do well. Investors that enter the market later, and get out last usually don't do as well.

Short Sales

Short Sales
A home that is listed for sale at a price lower than the amount owed on the mortgage. Homeowners hope to sell their home as a short sale to avoid penalties associated with going into foreclosure. What can make it difficult to buy a short sale is that there are often two mortgages on the home and both lenders must approve the sale. The ownership of the mortgages on a short sale home usually belong to more than one party, so you'll likely have to convince multiple banks and lenders to take a loss on their original loan. This is why it often takes so long to approve a short sale offer. If the short sale fails and the homeowner can't afford to pay his mortgage, then the bank forecloses on the home.

U.S. Home Prices Highest in 7 Years

U.S. home prices jumped 12.2 percent in May from a year ago, the most in seven years.

Real estate data provider CoreLogic said Tuesday that home prices rose from a year ago in 48 states. They fell only in Delaware and Alabama. And all but three of the 100 largest cities reported price gains.

Prices rose 26 percent in Nevada to lead all states. It was followed by California (20.2 percent), Arizona (16.9 percent), Hawaii (16.1 percent) and Oregon (15.5 percent).

CoreLogic also says prices rose 2.6 percent in May from April, the fifteenth straight month-over-month increase.

Steady hiring and low mortgage rates have encouraged more Americans to buy homes. Greater demand, a limited number of homes for sale and fewer foreclosures have pushed prices higher. Prices are still 20 percent below the peak reached in April 2006, according to CoreLogic.

Sales of previously occupied homes topped the 5 million mark in May for the first time in 3 ½ years. And the proportion of those sales that were "distressed" was at the lowest level in more than four years for the second straight month. Distressed home sales include foreclosures and short sales. A short sale is when a home sells for less than what is owed on the mortgage.

Home sales are expected to increase in the coming months. That's because the number of people who signed contracts to buy homes rose in June to the highest level since December 2006. There's generally a one- to two-month lag between a signed contract and a completed sale.

One worry is that higher mortgage rates could slow the housing recovery. Still, rates remain low by historical standards. And increases in rates could boost home sales. That's' because many Americans may act to lock in the lower rates before they rise further.

A survey by the University of Michigan released last week found more Americans believe it is a good time to buy a home because both rates and prices are just starting to rise.

Rates have been trending higher for two months. And the average rate on a 30-year fixed mortgage leapt to 4.46 percent last week, according to mortgage buyer Freddie Mac. That's the highest in two years and a point more than a month ago.

Mortgage rates surged after Federal Reserve chairman Ben Bernanke said last month that the Fed could scale back its bond buying later this year and end it next year if the economy continued to strengthen. The bond purchases have kept long-term rates down.

Economists say that higher mortgage rates are unlikely to stifle the housing recovery. A more critical issue is whether potential buyers can get loans. There are signs that banks have become more willing to extend mortgages.