Short Sales to Prevent Michigan Foreclosures

Dec 9, 2008 | Filed under: bank foreclosures

The foreclosure in the US at present is one of the worst housing crises that have been seen for years. Unfortunately no state seems to be escaping the consequences of these actions. Foreclosure on a person’s property is a dramatic sequence of events that leaves the home owner with very little recourse; he is always left with a terrible credit score and will find it very difficult to obtain any kind of credit for as much as three years. Michigan foreclosure rates are no different from any other state and are occurring at a massive rate.

A short sale is one way to prevent Michigan foreclosures, it is not the only way, but it certainly an option. These are held to stop the foreclosure and the implications of this to the real estate owner are added incentive for him or her to sell the property at a far cheaper price, which opens up a valuable investor opportunity.

A short sale is far less expensive than a foreclosure. It also proceeds much faster. Negotiations have to take place with all the title lien holders, these negotiations entail paying back the liens at discounted costs. In effect this is the sale of a debt, although it does not cancel the remaining balance owed to the bank unless they state this in the acceptance offer. Essentially the home owner will still owe the bank money even if the short sale has taken place, and the bank has the right to institute a deficiency judgment.

The bank will take a look at the circumstances of the home owner and if they are extenuating they might discount a mortgage loan balance. But this occurs only in extremely extenuating circumstances. These kinds of circumstances are actually occurring in the present real estate market and short sales are one way of dealing with the existing property slump.

If the income from the sale of the home is less than the balance owed, negotiation with the lenders loss adjustment department may result in a discounted loan. However 99% of the time this is not granted. But with permission from the bank the homeowner can sell his property at a lesser price and agree to repay the deficiency balance at a later date. The investment opportunity that a short sale provides is invaluable to the home buyer. They obtain a property at a much cheaper price than they normally would.

Short sales are not regulated by any kind of government agency; they are hybrid transactions that occur only at the discretion of the banker. It is recognized as being a standard business transaction. If you are an investor seeking Michigan foreclosures, never ignore a notice that says “short sale”, you may miss out on a very valuable real estate investing opportunity.

The short sale is just one of the kinds of transactions that can take place in Michigan foreclosures. It is vital for an investor to know all the possible transactions that can take place, if he is to make a mark for himself in real estate investing.

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