The recent recession and real estate bust has left many with property that is "upside down." By that, I mean that more is owed on the property than what it is worth. This means that there is no longer any positive equity in the property.
Sometimes owners of such upside down property cannot afford to continue payments on such properties. Ordinarily, they would face foreclosure. Short sales are an alternative to foreclosure.
If a short sale, the owner finds a buyer who is attempting to buy, but at a price that is not sufficent to pay off the Seller’s mortgage. The Seller must then involve the Seller’s lender to get permission to conduct a short sale. As part of the process of getting the short sale approved by Seller’s lender, such lender makes a decision as to whether or not the Seller will be released from liability after the short sale has been completed.
Negotiating a short sale then required considerable expertise on behalf of the Seller. Arguments can be made that the lender would be wise to allow the short sale, because the alternative (foreclosure) takes time and costs money, all during a period of falling prices. A further argument can be made in most cases that even if the lender were to obtain a deficiency judgment, the Seller has nothing for the lender to go after. Such negotiations take time and can become very cost consuming.
In order to provide our clients with the abiltiy to do short sales, I write title insurance through Attorneys Title Guaranty Corporation (ATG). As such, we can employ ATG to do all the short sale negotiations and since they do a huge volume of such work, they can be very effective, efficient and may even do so at a substantial cost savings.
Buyers share the same concerns as Sellers in short sales, since such sales take a long time and tie Buyers to their contractual committments for that duration. Thus, Buyers also find themselves talking with Seller’s lenders and arguing that such short sales should be approved. The lending industry, on the other hand, has all kinds of regulations and policies in place to assure that they don’t inappropriately approve a short sale and take a loss when they haven’t consdered all the alternatives.
Come see us if you have questions about short sales. We can tell you whether we can help you out!