Idaho Falls Foreclosed Homes
Idaho Falls Bank Owned Properties

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We work with banks and know about properties coming on the market before others.

You can A short sale is a “pre-foreclosure” attempt by the homeowner to sell the home prior to a formal foreclosure taking place.

THESE HOMES MUST BE SOLD!

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Idaho Falls Foreclosed Homes
Idaho Falls Bank Owned Properties

FREE List of East Idaho Foreclosed Homes, Bank-Owned, Short Sales and Other Bargain Properties Emailed To You!

We work with banks and know about properties coming on the market before others.

You can A short sale is a “pre-foreclosure” attempt by the homeowner to sell the home prior to a formal foreclosure taking place.

THESE HOMES MUST BE SOLD!

Order Your Free List NOW!

Idaho Falls Short Sales

Short sales are one category of sales which fall under the term “distressed”, which is a broad term meaning any real estate sale in which the home owner does not have enough equity to sell the home without additional funds being due at closing. By way of example, John and Mary Jones are short selling their Idaho Falls home. They have a mortgage on the home with a balance due of $205,000. Their short sale home has a fair market value of $190,000 (the amount of money that a buyer would be willing to pay for the home). Their real estate agent has informed them that their Cost of Sale will be approximately $13,000 in order to sell this home. Cost of Sale is money paid to the real estate brokers and title company in order to prepare the appropriate documentation and complete the sale. Therefore, when short selling this home, the amount of money that will be due at closing is $28,000. This amount due is equal to the difference between the sale price ($190,000) and the amount owed on the mortgage ($205,000), PLUS the Cost of Sales ($13,000).

What is a Short Sale?

Idaho Falls short sales A short sale is a “pre-foreclosure” attempt by the homeowner to sell the home prior to a formal foreclosure taking place. The term “short sale” comes from the idea that the bank (or mortgage holder) must take a “short” on the loan payoff. In the example of Mr. and Mrs. Jones above, the amount of the “short” is $28,000, meaning that the bank will only receive $177,000 toward paying off the loan balance of $205,000. If the bank agrees to taking the “short”, then the home can be sold to the new buyer prior to foreclosure taking place. Why would the bank take $28,000 less than they are owed? There are two main reasons: (1) Short selling a home avoids foreclosure, which is a process that can cost the bank thousands of dollars in legal fees; and (2) the foreclosure process can be lengthy, during which time the bank continues to keep the loan on its books.

Are short sales advantageous to the homeowner? In general, yes, a short sale is a better outcome than a foreclosure, due to the fact that a foreclosure has a greater negative effect on the homeowners’ credit than a short sale. While there are many cases where a short sale negatively affects the homeowners credit to the same extent as a foreclosure, the overall data on a national scale indicates that the short sale process general results in a better credit situation for the homeowner.

Short Selling

For the homeowner considering short selling, several words of caution are in order. Since the bank is taking a loss on the short sale, the homeowner is not permitted to make any money on the short sale. This means that the bottom line amount on the closing settlement statement must be zero to the seller (the homeowner). Additionally, most banks will not even consider a home for the short sale process unless the homeowner is six months behind on their house payments. This rule prevents many homeowners that would like to short sell (because they can see an issue in the future with being able to make the house payments) not be able to short sell, since their payments are current. This rule is a major flaw in the system, because it prevents responsible homeowners from short selling. The system should be set up to reward those homeowners that are forward-thinking in anticipating a financial issue with making their house payments, rather than only considering short selling those home in which the homeowner has gotten seriously behind in their house payments.

Keller Williams Realty East Idaho