What is the term for this situation?
Friday, 30. July 2010
I went to look at a house yesterday and the real estate agent was explaining to me that the homeowner had bought the house for more than he was selling it for and that he had also taken out a home equity loan on the house. She said therefore it was the bank that would decide whether or not they would be accepting out bid because he owes more on the house than he can make off it. She didn’t say he was in foreclosure at all but she used a term for the situation that I can’t remember, I believe it was something having to do with stop or step, does anyone know?
Theandysullivan Says:
The agent is trying to "short sale" the house. I deal in them a good bit and they are a pain in the behind! Not for you though. For you all you have to do is sit back and be patient. Short sales are a good way to move into a property at a bit of an advantage. You have to think if a mortgage company was once able to loan that kind of money on a house, the market will come back and you will realize some positive equity. The key is to not take out that home equity loan that youre going to begin seeing offers for. Because the same thing could happen to you.
For the seller there are some reprocussions when selling your mortgage short but it is a great way for a competent agent to help their clients out of a sticky situation and avoid foreclosure.
Good luck, and dont forget to ask around about your $8k tax credit!
deedles Says:
He’s in negative equity.
alicegirl71 Says:
That is called a short sale. The lender is willing to accept less than the total amount due on the loan, because the house isn’t really worth that much. Lenders feel this is sometimes better than foreclosure, because they might get a greater portion of the money back that was loaned than if a foreclosed house is sold at auction. So the lender has the right to approve your offer, so that they can get as much of the loan value as possible.