A short sale is the sale of real estate in which the proceeds from the sale of the property will not be enough to pay the balance of the debts that are secured by liens against the property.
Blogger: Mark Rooney, Investinus Group
It is where the property owner cannot afford to repay the liens full amounts and the liens holder (the banks etc.) agrees to release the lien on the real estate and accept less than the amount owed on debt.” Any unpaid balance owed to the creditors is known as the deficiency. As commonly thought the short sale does not release the borrower from their obligation to repay the loan.”
‘In respect to this there is an opportunity for investors in Australia if you have the connections to these people that they are looking to be released from the debt and are willing to make a deal. I have found myself often be approached by such people and it is amazing the opportunities that can be made. It is important that you must remember that they are in a particular situation and it is not in the best interest of all parties to take advantage of them. The best deals are the ones when all parties are happy therefore I recommend that you offer a deal that does not take advantage of them but reinforce a relationship with them that can be win-win for all.’
Following on in respect to the short sale it is often used as an alternative to a foreclosure because it mitigates additional fees and costs to both the creditor and the borrower. Both avenues will often result in a negative credit report against the property owner.
Most creditors require the borrowers to prove they have an economic or financial hardship preventing them from being able to pay the deficiency. This has caused issues in the past and has opened up a lot of issues more recently due to evidence of the US economic conditions becoming better.
“Creditors holding liens against real estate can include primary mortgages, junior lien holders, such as second mortgages, home equity lines of credit (HELOC) lenders, home owners association HOA (special assessment liens) (HOA, Home Owners Association )all of whom will need to approve individual applications for a short sale, should they be asked to take less than what is owed.”
Therefore as you can see the short sales process is not as simple as first thought and many real estate agents/ brokers in the USA do not even want to deal with such details. Leaving an opportunity to an avid investor who really knows what he is doing and how to do it.
About Mark Rooney
Mark first found out about the advantages in the U.S real estate market in February 2002, whilst on a business trip to Canada and the U.S.A. The initial contacts made were able to assist with learning and studying the market place and how an Australian can invest into the U.S market safely and also have assurance that a team there can protect the asset.
For the next 4 years Mark researched the U.S real estate market and looked for opportunities to build further relationships with people. Over the next few years Mark gained an understanding of the various cities and what investment outcomes they provided a foreign investor.
In 2009 Mark was asked to assist others with purchasing property in the U.S.A. This was the initial beginnings of Investinus Group, whose focus is ensuring that their clients have a safe and secure investment in U.S. real estate.
The group aims to build strong relationships with their clients and the people who work with them, suppliers, property managers, attorneys, accountants and developers.