In a down economy, many real estate agents are finding that short sales comprise a good part of their sales. It is not as straightforward a process as a basic sale might be, so it is important for you to gain experience and information before taking on a short sale. Here are a few questions you may have:
Basically, when a seller owes more on a home than he could get back from selling it, the lender may agree to accept less than the amount owed. Although the seller would receive no money from this transaction, he would be free of the mortgage and receive less damage to his credit than he would in a foreclosure.
Contrary to common belief, the real estate agent does get paid a commission on a short sale. The lender, who is the one paying the commission, is willing to do this because a home can sell at a higher price in a short sale than in a foreclosure.
If a client of yours wants to buy a short sale property, he should be advised that there could be consequences. You might encourage them to get legal advice through a lawyer specializing in real estate and to check with an accountant on the tax laws involved in a short sale. It is not a good idea to give this type of advice, since that is not your area of expertise.
If the real estate agent and the buyer do their homework, a short sale can be of great benefit to both parties. However, it is important for all involved to understand that this may be a longer process than a conventional sale.
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