San Diego Foreclosure And San Diego Short Sales

As a preventive measure for foreclosure, people resort to a process known as a short sale. A short sale is when a lender agrees to sell a mortgaged property at a discounted price that is less then what is owed on the property. In other words, a short sale happens to prevent foreclosure and the bank agrees that the owner sells the mortgaged property at the price less than its mortgage balance. Proceeds from sale then go to the borrower as payment for the outstanding balance.

The common notion is that taking advantage of a short sale is a good bargain, but this isn’t the case all the time. Though purchasing a short sale is often a great way to acquire real estate because of its lower prices, many times, due to the real estate market going through a downturn, you can purchase a home and still experience a reduction in value.

A short sale also has its downsides. When you go into a short sale, the typical process takes longer because transactions are done directly with the bank and must gain their approval to sell the home. The process itself is a bit complicated as it is not as common as a regular real estate transaction. Also, when a client makes an offer to purchase a real estate short sale they do not have the benefit of getting a quick response like they would from a regular seller.

The process of getting approved for a short sale is the exact opposite of what a borrower goes through when they are trying to obtain financing. When a seller is trying to get the bank to approve them for a short sale, they have to show the bank that they have made every attempt possible to try and make the payments. Also when a borrower obtains financing they have to show that they can afford to make the mortgage payments.

Among the areas that have experienced a large increase in home values in the last few years is San Diego in California. As a result, San Diego short sales of homes increased and the real estate market is going through a correction or cooling off phase where we can see home values come down. This can result in the home being worth less than the mortgage balance.

With the rising costs of real estate, San Diego foreclosure sank in. Having this situation in the area created a “short-sale” demand. San Diego foreclosure proceedings usually began after a borrower had skipped three mortgage payments. The lender would record a notice of default against the property. Unless the debt is satisfied, the lender would foreclose on the mortgage and proceed to set up a trustee sale.

The process of buying directly at a legal foreclosure sale is risky and dangerous, plus it has many disadvantages. There is no financing to support this so we are looking at cash basis. Another precaution to take is to check the title before the purchase or the buyer could get a seriously deficient title.

The property’s condition is not well known and an interior inspection of the property may not be possible before the sale. In addition, only estate (probate) and foreclosure sales are exempt from some states’ disclosure laws. In both cases, the law protects the seller (usually an heir or financial institution) who has recently acquired the property through adverse circumstances and may have little or no direct information about it.

Most residents know that there is no shortage of San Diego foreclosures. In this real estate market, buyers will score a bargain if they just look for any one of the San Diego short sales available.