Short sale explanation and state laws impact?

Question

Could an experienced investor in real estate or realtor give me a quick overview of the short sale process in preforeclosure?
Is there any thing in the Californian state laws that I should be aware of before thinking of investing this way?

Answer 1

The answers you have already give you a very good idea of the both the definition and the risks associated with this investment strategy. Over-mortgaged properties in a flat market or location where prices are falling are unlikely to be sold by the lender without a loss. Whether or not, and for how much , a lender will agree to discount the loan balance depends much on how high the risk is of a loss on a forced sale.
Good short sale acceptances are, in my opinion, the result of successful negotiations with the lender. Following acceptance of the short sale offer the lender settles in full the amount owed for lesser value and forgives the remaining balance, clearly a better result for the homeowner than a foreclosure sale.
California has some laws to protect the homeowner against any predatory practices of short sale investors, and some other states follow these. A real estate agent cannot represent an investor/buyer to purchase a foreclosure property if 4 factors are all present; it's the seller's place of residence, it's a single family home or 2 to 4 units, a NOD is already in the public records, and the buyer will not occupy the home. If 1 of these 4 factors is not present, an agent can represent the buyer intending to live in the home, but representation of an investor has special requirements.
I am a contributor to the forum at http://www.foreclosuredatabank.com/board/ and much of this response is similiar to one given there. I recommend as I did then that you follow the link given in the sources section to read about California foreclosure law.

Answer 2

im not a realtor, i just work at a real estate company. I think the short sale process is when you get your bank to agree to reconcile the debt for less than what you owe them when you sell your house. So say u owe 160,000 and u sell ur home for 140,000 the bank will agree to eat the other 20,000.

In the state of michigan, short sale gives your credit a one year hit. So the realtors generally suggest buying a new home just before you short sale your old home so that you get out of your current mortgage, and take the credit score hit after you already have a new home.

Hoped this helped somewhat, in my job i just assist realtors, i havent learned the legal aspect enough to try and get my liscence.

Answer 3

A short sale is having the bank accept an amount of money that is less then what is owed on the property. If your going into forclosure then you will want to sell your house.

For example, lets say you owe 100k house and you try to sell it for 90k. That would be considered a short sale because your trying to give them 90k instead of 100k. If your house goes to sheriff sale and sells for 30k, BY LAW, you will only owe the bank 30k instead of 100k but that always isnt the case. If it goes to sheriff sale and sells for 125k, your going to be hurting. Laws vary from state to state but in Michigan, once it goes to sheriff sale, you have 6 months to live in the property or 12 months in the property if you own acreage. Its a great way to invest but its a long process thats a pain in the butt.

If you can find people who need to sell there home because they are losing there home then tell them to sell it. They are going to want to sell it because it will show on there credit report that its been paid off instead of an open collection. Also, if they owe 100k and the bank takes the property and resells it for 50k. The bank took a 50k loss so the IRS will be coming after you and making sure taxes are being paid on that extra 50k because they see it as you just made a profit.

Answer 4

As a buyer, the fact that you are purchasing a 'short sale' is of no consequence. The problems from that remain with the seller of the property, including lowered credit scores and possible liability for the remainder of the balance owed.

All you need to do is satisfy yourself that the property you are considering is worth what you offer to pay, and at closing, insure that all liens attached to the property are removed legally.

Answer 5

You heard incorrectly relating to the recent regulation. What grew to become into signed grew to become right into a regulation making certainly one of these deficiency no longer taxable earnings. in the previous, if the lender did no longer pursue the deficiency, the earnings could be stated on sort 1099 and had to be seen taxable earnings. the recent regulation says no longer something approximately forgiveness of the deficiency. The lender nonetheless has the alternative of taking you to courtroom to acquire a deficiency judgment.