Who Makes Money From a Short Sale?
For home owners who can no longer afford their house payments and need to move, having a house with a value that has dropped below the mortgage balance can make the situation look pretty grim.
The best solution for them may be negotiating a short sale with their lender.
What is a Short Sale? This type of sale occurs when a property sells for less than what is owed on its mortgage.
It allows the seller to escape foreclosure and frees them from the mortgage.
It is usually a better option for the mortgage company as well, avoiding the legal hassles of foreclosure and selling the home themselves.
The lender must agree to the sale, however.
There is no law requiring them to accept this type of arrangement, so the seller must talk to the lender to get approval first.
The home owner will be able to get out from under the debt but, unfortunately, they will not be able to make any money when they sell their house.
So does anyone profit from the sale of the house? Actually, the list of people who make money from a short sale is long.
In fact, nearly everyone involved in the sale except the seller stands to profit.
Here are a few people who benefit: Realtors Make Money from a Short Sale The real estate agents that list and sell the home will each make a profit.
It may not be as much as they would normally make for the same size sale as the lender will demand a reduced commission rate but they will each earn some money.
Title Companies Profit A title company is used to create a new owner's title and a new ALTA policy for the new lender or, in some states, to provide abstract services.
Regardless of which method your state uses, the title company will profit.
The New Lender Makes Money from a Short Sale The new lender now has a new client, which means money in their pockets.
Some of that profit will trickle down to pay the loan processor and the underwriter.
Insurance Companies Profit When you buy a house and take out a mortgage, you must insure the property.
Insurance companies benefit from the premiums you pay for that insurance.
The money also helps to pay the insurance agent.
The Buyer Often Makes Money from a Short Sale Because the buyer is usually purchasing this type of home for a price somewhat below market value, he stands to profit in the long run.
His mortgage payment will be lower than if he had paid full price and taxes could also be less.
While you as the seller won't benefit from this type of sale you will be avoiding foreclosure and gaining a fresh financial start as far as your real estate investments are concerned.
Nothing could be more liberating.
The best solution for them may be negotiating a short sale with their lender.
What is a Short Sale? This type of sale occurs when a property sells for less than what is owed on its mortgage.
It allows the seller to escape foreclosure and frees them from the mortgage.
It is usually a better option for the mortgage company as well, avoiding the legal hassles of foreclosure and selling the home themselves.
The lender must agree to the sale, however.
There is no law requiring them to accept this type of arrangement, so the seller must talk to the lender to get approval first.
The home owner will be able to get out from under the debt but, unfortunately, they will not be able to make any money when they sell their house.
So does anyone profit from the sale of the house? Actually, the list of people who make money from a short sale is long.
In fact, nearly everyone involved in the sale except the seller stands to profit.
Here are a few people who benefit: Realtors Make Money from a Short Sale The real estate agents that list and sell the home will each make a profit.
It may not be as much as they would normally make for the same size sale as the lender will demand a reduced commission rate but they will each earn some money.
Title Companies Profit A title company is used to create a new owner's title and a new ALTA policy for the new lender or, in some states, to provide abstract services.
Regardless of which method your state uses, the title company will profit.
The New Lender Makes Money from a Short Sale The new lender now has a new client, which means money in their pockets.
Some of that profit will trickle down to pay the loan processor and the underwriter.
Insurance Companies Profit When you buy a house and take out a mortgage, you must insure the property.
Insurance companies benefit from the premiums you pay for that insurance.
The money also helps to pay the insurance agent.
The Buyer Often Makes Money from a Short Sale Because the buyer is usually purchasing this type of home for a price somewhat below market value, he stands to profit in the long run.
His mortgage payment will be lower than if he had paid full price and taxes could also be less.
While you as the seller won't benefit from this type of sale you will be avoiding foreclosure and gaining a fresh financial start as far as your real estate investments are concerned.
Nothing could be more liberating.