If it seems like short sales have suddenly exploded in the real estate arena, it’s not your imagination.

Once considered relatively rare, short sales have become a common phenomenon in the past 18 months,thanks in large part to the banking and mortgage crisis.

To find out if you can benefit from a short sale, here’s some helpful information about the practice.

What Is a Short Sale?

Short sales occur when the bank and seller agree to a purchase price for real estate that is less than the original mortgage amount and does not cover the entire cost of the existing debt obligation.

Who Benefits?

Depending upon how the deal is structured, everyone can benefit from a short sale.

The seller benefits from the ability to save his or her credit rating and avoid bankruptcy or face a mountain of debt, the buyer benefits from acquiring a property at below market price, and the lender benefits from asure sale that reduces the risk of a property going to auction or of  having to foot the bill for foreclosure and additional expenses.

Considerations and Consequences

Short sales are not without consequences, so take time to carefully weigh all options before making a decision.

Sellers need to carefully review the terms prior to signing a final contract.

Some lenders expect the seller to make up the difference between the selling price and the full amount of the original mortgage.

Buyers should also proceed with caution, as many properties have additional liens, deferred maintenance,back taxes or other expensive fees that may become the obligation of the buyer.

Additionally, short sales may require substantial time before obtaining final approval, which can make itdifficult to lock in favorable rates or result in the loss of other prospective properties.

Seminole Title Company has a department that specializes in short sales and can assist sellers, realtors and buyers in getting through a very complicated process. Please call us if you are thinking about a short sale.

Whether you are buying or selling, the language of real estate is often complex and confusing. Following is a plain-language explanation of commonly encountered real-estate-related lingo.

Title: Title to a property essentially denotes ownership interest and is designated by the name(s) on specific legaldocuments such as mortgages and deeds. The title can be held by an individual, couple or even a corporation.

Deed: A deed is used to transfer ownership of property from one person or entity to another person or entity.

Deed of Trust: A deed of trust is a document that transfers title in a property, with the stipulation that the transfer iscontingent upon repayment of an existing loan.

Mortgage: A mortgage is a loan you take out to buy property.

Clear Title: Clear title indicates that the property is free of liens or legal questions surrounding ownership.

Chain of Title: The record of historical ownership of a property. The title company or real estate attorney typicallyreviews the record in order to determine clear title.

Clouded Title: Any property that has an existing question regarding ownership, chain of title or even liens mayhave a “clouded” rather than “clear” title, which may adversely impact the ability to obtain financing or properlyrecord the title. Most clouded title issues require a release, court action or other legal intervention to remediate.

If you have ever wondered why it’s better to work with an agent rather than listing “by owner,” you aren’t alone. Superficially, selling a home seems easy – until you actually try it.

According to statistics, nearly 80% of people give up and list with an agent after months of costly and time-consuming delay.

Here is why agents matter more than ever:

Time

Showing homes, answering calls, responding to email, scheduling inspections and appraisals plus much more are time consuming tasks; more importantly, everything involved in a real estate transaction is time sensitive. Delays can cause a deal to fall through even at the last moment.

Promotion

Agents specialize in a specific location and know exactly what buyers are searching for in your area.

Not only do they know how to price right and grab the attention of prospective buyers, but many agents have an established list of buyers waiting for specific types of properties.

Successful real estate marketing requires extensive experience, time and persistence to achieve top prices in a buyer’s market.

Cost

Selling a home requires more than simply placing a sign on the front lawn; it also entails a lot of out-of-pocket expenses with no guarantee of success. Advertising can cost hundreds or even thousands of dollars, listing with a “by owner” agency or MLS service typically adds hundreds more.

Finally, it is important to remember that real estate agents split commissions between the listing agent and the selling agent. To attract attention to your home it is still necessary to split the commission with any agents who bring buyers to the table.

Working with a real estate agent is likely to save you money over the long run.