Short sales and foreclosures are unfortunately becoming more and more common in Staten Island, Brooklyn, and elsewhere due to the downturned economy. Being knowledgeable about these types of home sales is important, both as a buyer or a seller. As a seller, this knowledge can help ease a very difficult situation. As a buyer, you can potentially find a very competitively priced home that interests you.
In order to understand short sales, it's first helpful to understand what a foreclosure is. A foreclosure usually arises when a homeowner, who has entered a mortgage loan agreement with a lender (usually a bank or other secured creditor), is unable to comply with the terms of the agreement, such as failing to make mortgage payments. In such a situation, the lender is legally permitted to repossess the real property as per the mortgage agreement. Once the lender has repossessed the property, it can be sold to recover the cost of the mortgage and any legal costs. If these costs are not covered by the sale of the property, a lender may be able to file for a deficiency judgment for the difference.
A foreclosure is generally a worst-case scenario for both a borrower and a lender. A foreclosure drastically hurts a borrower's credit, becoming a black mark on a borrower's credit history. Further, even after a foreclosure, a borrower may still retain a significant portion of the debt.
For the lender, a foreclosure is a relatively slow process and entails considerable legal costs. The lender is also then burdened with the task of selling the property.
Browse through Brooklyn and Staten Island foreclosure real estate or call us at 718-370-3200 to have us look for foreclosures for you.
A short sale is usually preferred to a foreclosure when a homeowner can't keep up with mortgage payments. In a short sale, a borrower is similarly unable to continue paying the mortgage amount. However, in a short sale, the borrower and lender have reached an agreement to avoid foreclosure by selling the home at a price less than the amount owed on the property loan. Typically, the lender will agree to forgive the remainder of the loan.
By entering a short sale agreement with the lender, a borrower can simultaneously lessen credit score damage and reduce the amount of remaining debt.
Short sale agreements appeal to lenders because they allow for a smaller financial loss than would likely result from foreclosure or non-payment from the borrower. Also it is typically faster and less costly to arrange, and it doesn't require the lender to handle the sale of the property.
Browse through Brooklyn and Staten Island short sale real estate or call us at 718-370-3200 to have us look for short sales for you.
*As a real estate agency, we are not allowed to offer legal counsel. We recommend speaking to a qualified lawyer concerning your specific circumstance.