SELLING ON A SHORT SALE
Sellers who owe more on their loan than their Denver home is worth are very depressed to be in this situation and feel as if there is no way out. A short sale may help to pull a seller out of their current dilemma and help them to move on.
A short sale is when a seller or their agent sells their Denver home to a buyer at either market value or slightly less. The lender in turn agrees to accept the amount received from the buyer as full payment of the owed mortgage, even when the amount the home sold for is less that what is owed.
Lenders are not required to help the seller out with a short sale and therefore may not always agree to it, but it never hurts to try.
Who Makes Money on a Short Sale?
Many sellers are interested in finding out who exactly makes money off of a short sale. Keep in mind that a short sale will not happen if a seller has the option to make money and the lender will lose money as well, if they agree to sell the Denver home at market value or less. It seems that any other party that participates in the short sale does indeed make money.
Below is a list of individuals who will make money from all of their hard work on short sales:
·Existing Mortgagee.
The current lender may not make money, but benefits from a short sale in that they do not have to list the home on their financial books, they do not have to file foreclosure and do not have spend a countless amount of time looking for a buyer.
·Listing Agents and Buying Agents.
Denver agents and brokers will definitely get paid for their services. The only downfall to a short sale is that the amount may not be as high as they expected, due to the negotiation of the commission by the lender.
·Title Company.
The title companies will provide the buyer with a title policy in the owner's favor. An ALTA policy will also be issued in favor of the new lender. This will allow the title company to make money off of the short sale.
·Escrow Company.
The amount of money that independent third party escrow companies make is divided between the buyer and lender. Some states do not have third party escrow companies, but those that do come out ahead during short sales and make money as well.
·Real Estate Lawyers.
Lawyers get paid for their legal advice regarding short sales. Some buyers may think a lawyer is not needed during this purchase, but it is highly advised. Remember short sales require a massive amount of paperwork and buyers should understand every word of the agreements.
·Tax Consultants and CPAs.
Sellers should consultant some type of tax or CPA professional regarding the short sale of their home. Many times there are tax ramifications when a short sale is conducted.
·The Internal Revenue Service.
A 1099 will be issued by the IRS and the seller will pay taxes on the short sale.
·The Buyer.
Many times a buyer's mortgage is offered at a reduced price, due to the purchase amount. This amount will be at market value or below. This allows for a tax break and mortgage discount.
·The New Lender.
Anytime a new loan is processed, the new lender makes money. This money also helps to pay the underwriters and other employers who help with the lending process.
·The Appraiser.
An appraisal is required even for a short sale. It is true the home may sell at or below market value, but appraisals are required as a legal part of a short sale.
·The New Mortgage Broker.
The YSP and packaging of a mortgage broker earns them paid points on the loan, therefore bringing in a decent-sized paycheck.
·County Tax Assessor.
If the area requires that the property is to be reassessed upon sale, the tax assessor will continually collect property taxes on a judicious foundation and often times at a higher assessment value, due to the resale price. The Refinance of a loan does not customarily affect tax assessments.
·Insurance Company.
Insurance agents will make money from gaining the new insurance premium from the buyer and the insurance agent will earn a commission on the sale of the insurance plan.
