Short sale funding- what and how

Short sale funding- what and how

If you are aware of the present real estate market, it is natural that you must also have heard of the term short sale funding and the innumerable other terms that are related to short sales. These include back to back closings, short sale flips, transactional funding etc. These have been the well discussed topics so as to how to legally and ethically flip short sales. A short sale is said to be when the person who has taken a mortgage, owes more than he actually owns and to add to his worries, he is even late on his mortgage. So now, if the seller wishes to sell the home and even the bank does not want to register a bad loan in its books, then the bank must compromise and buy the mortgaged property at a price that is actually less than what is owned on the home. However if the bank realizes that more money can be net from the short sale, that if the foreclosure was applied, and then they auction or sell the property as a bank owned property, they might settle for the less than what is owned offer. Now this kind of a situation is a win win situation for the bank and also the owner as the foreclosure is prevented and at the same time, there is no bad loan record in the books of the lender. Now these kinds of transactions have dominant in today’s real estate market.

With the increase in the popularity of short sales transactions the property owners and the bank are in a profitable position. The investors help the owners and also make profits while doing so. These transactions might take about 4 to 8 months but still are famous because they involve a low risk factor than the liability. In the short sale flips, transparency plays an important role so that the transaction is legal and ethical.

This can be achieved by the disclosure of the facts by the buyer. He must disclose that his intentions are to resell the property immediately to a third party for a profit. Most of the investors around the country also use an option contract.

It is for the lender to decide that he is or he is not accepting the offer so that he has a disclosure of what is being done through the verbiage. Therefore the investor must disclose the fact that he plans to sell the property immediately for a profit. This is the basis of the short sale funding.

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Tagged with: Funding • Sale • Short

Filed under: Bulk REO Financing

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