The Secret to Short Sales!
If you're looking to get a "deal" on a real estate in Anchorage, Eagle River or Wasilla and Palmer, you've probably seen screaming deals advertised as a short sale. In today's blog post, we'll discover exactly what a short sale is, the process by which it happens, and how you can get one of those screaming home deals!
A short sale is typically granted by a bank for two main reasons: the seller has endured a recent hardship and is unable to make mortgage payments and/or there is not enough equity in the home for a straight sale to pay off the entirety of the mortgage.
Some examples of a seller hardship may include: reduced income, unemployment, economic hardships, divorce, death, personal and medical emergencies, unforeseen issues with the home resulting in large bills.
The seller, after being left with no option, must present a short sale packet to the bank identifying their hardship and also giving their approval for a short sale to happen. Why would they do this? Often times the only alternative is a foreclosure, which could have a much larger impact on their life (most importantly, credit) than a short sale.
Now that we know what a short sale is, how can you get one? Can just anyone get a short sale for that oh so precious instant equity? Well, the right answer is: it depends.
Depending on the shape of the home, it may be financeable through common conventional means (FHA or VA financing). Due to FHA and VA regulations, the terms on which they will provide financing for a home depends largely on the shape it's in. To simplify the idea of this, the home needs to be in a good “livable” condition, and will need to comply with the standards of a home appraisal.
If the home needs work, such as a new heating system or a new roof, there are some alternative financing programs. These include the FHA 203k program and other rehab loans (click here for more information on local rehab loans).
Beyond this, if you are a seasoned investor or property flipper, you may have an existing relationship with a bank that will give you either a conventional loan, personal line of credit (PLOC), or portfolio lending based on your economic conditions and past experience.
Lastly, if the property is in rough shape and financing is not an option, cash is always king! This means you will have to pay in secured funds (cash or cashing out an IRA for example) for the property. The good news here is you can get an ample discount at times if you do use cash.
If you are dead set on acquiring a property that is in rough shape, it cannot be financed, and you do not have cash, there are always Hard Money Lenders that may be willing to help you out. This is a topic for another time, but if you're a motivated individual who can commit to a solid game plan, this could be a route for you!
So there you have it! We now know what a short sale is, and how to get one. Now that you know, click here to start finding those deals!
For more information, please call our local Real Estate Expert James Cash at 907-360-7448 or e-mail at firstname.lastname@example.org