Thursday, October 1, 2009

Short Sales

Why short sales (pre-foreclosure sales) are a good thing for buyers in today’s market? Because many times you will be able to buy a great home under market prices without the hassle of foreclosure sales.

In cases where Fannie Mae is the insurer, here’s the definition of a "short" sale: It is "the sale of a property in which Fannie Mae, the mortgage insurer, and the borrower all agree to accept its proceeds as satisfaction of a defaulted mortgage, even though the amount of those proceeds may be less than the amount owed on the mortgage."

In fact, most foreclosures sale does not allow a buyer adequate time to do their due diligence on a home. In many cases the price paid by the seller at these foreclosure auctions are equal to or more than the negotiated price of the short sales.

Going through a short sale process is identical to buying any other home – you work through a Realtor and do your financing at a regular bank. The difference is sometimes you are required to pre-qualify at the bank of the insurer’s choice. Having excellent credit is imperative to these kinds of deal.

These are not quick buy and flip homes, but a very reasonable and acceptable way of getting into a neighborhood you would otherwise not be able to afford as well as a long term investment.

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