Click here for a list of Foreclosures in Metro Atlanta What is a Foreclosure? If you have purchased a home using a home loan, your lender will have taken a security interest in the home. If you cannot keep up with mortgage repayments on your home, the security interest gives the lender the right to proceed with a foreclosure. If the lender has to take the home back, they will try several ways to sell the home to repay the debt. This can include auctioning off the house and using the proceeds to recover their investment or if that doesn't work, they will hire a Real Estate Agent to sell the home. If your property is not sold or the purchase price is not enough to cover the lender’s loan, a deficiency judgment could be filed against you. A foreclosure and a deficiency judgment will seriously hinder your ability to obtain real estate in the future. A foreclosure can have a negative impact on your credit and a owner should try everything to avoid it. The most common way to avoid foreclosure is to make a payment to cover your current delinquency. If this is not an option, a Short-Sale could be your next option. Click her for a list of Metro Atlanta's Short- Sales What is a Short- Sale? Short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a short sale. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all. At the time of this writing, foreclosures are at an all time high, which basically translates into more opportunities for you. Since foreclosures are increasing, this is the perfect time to jump into this because there will be more and more lenders discounting properties. It is safe to say that most lenders will accept a short sale, however, you may come across one or two lenders who will not discount. If the numbers work out for the lender they will do it. It is best to do a short sale when the property is in the pre-foreclosure state. Yes, you can perform a short sale when the bank owns the property, however your profits will more than likely be smaller. There are two stages within pre-foreclosure. The first stage being those individuals who are behind on payments and the second stage are those who are behind on payments with a notice of default. In order for this to work properly and for you to successfully get a short sale, you must find the homeowners who are in the second stage of pre-foreclosure or more than 3 payments behind on their mortgage. Once the notice of default has been recorded, banks become motivated as well, so you are more likely to get a discount. Until that time, very rarely will a bank ever discount a mortgage that soon. Why would they? The homeowners still have time to cure the loan and make up the back payments. It does not matter what type of house or condition it's in, all mortgages can be discounted. The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are "don't wanters". Properties that are over leveraged are also prime candidates. Most rookie investors who see a house over leveraged with an upside-down mortgage may think there is no hope for this property. On the other hand, this is a sweet deal to the savvy investor. Properties with large 2nd mortgages are also treated as gold because the 2nd mortgage is wiped out at the foreclosure auction. Lenders with a 2nd and 3rd mortgage position would rather have something than nothing. Information provide by Foreclosure University For more info on Bank Foreclosures and Short-Sale Help Willie Acree 404-903-5313
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