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Most of us, in order to fulfill our dreams, often resort to means with which we ourselves are not so familiar. Often we do not know how to deal in some situations but invariably find ourselves caught in one of those. The same is applicable when we dream of having our own home and, in the burst of enthusiasm, we end up taking loans that we are not always able to repay. There are more instances of missed payments every day and it is owed to this simple fact that instances of property foreclosure are also steadily escalating in the nation.
However trying a situation we may find ourselves in, it is possible to make our way out of it without having to turn a mountain around! Short sale is the obvious recluse here, which not only benefits the homeowners, but also the real estate investors and the lenders. Short sale is a term used in the real estate industry to denote a phenomenon where a home is sold for lesser value in comparison to its real market value up on the agreement of the lender and the buyer on the same, that is, less than the loan balance. This not only saves the homeowner from serious troubles that would have been caused by the foreclosure, but also helps the lender reduce its losses, also providing good opportunity for the investors to make profit on the same.
First, the homeowner is saved a lot of embarrassment and humiliation that the foreclosure would have brought him or her. The homeowner also gains if the property value is set lower than what one owes to the lender entity, by saving some otherwise payable cash. On the other hand, the homeowner also gains if the property value is set higher than what one owes the lender entity, of which one gets the excess which would not have been possible if the property was given for foreclosure.
Second, the lender makes more profit by giving the property under question for short sale. Otherwise, the lender organization would have had to bear all the expenses regarding the repair and refurbishment of the property, marketing it, selling it and so on. Moreover, there is no assurance that the property would sell at all! Therefore, the lender entity can save a lot on its labor, time and money, by approving of the short sale. The lender will also incur far less losses because the price that property gets for short sale is usually better than what it gets for a foreclosure auction.
Third, it is the investor, here the buyer of the property short sale, to derive the profit. With the home sold at respectively lower price than the actual industry standards, it can make more profit by reselling it at the standard industry price at some later point in time. Sometimes, an investor can expect up to a profit of $200,000. Moreover, there is more opportunity being created every year with so many foreclosure, and consequent short sale taking place all through the nation. |
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