Nowadays, home sales have become increasingly popular. Home owners unable to make their mortgage payments will eventually find themselves being served with a foreclosure notice from their bank or lender. In order to stop the foreclosure they can opt to ask if they may move towards a short sale. This is an agreement between the lender and homeowner to sell the home at a discount, which sometimes ends up being less than the actual mortgage balance. The difference that results is called a deficiency.

To give you a better understanding of how a deficiency happens here is an example. At the time of impending foreclosure the house goes into a sale. The lender agrees to stop the foreclosure process and put the house up for sale. The house sells but it’s not for enough to pay off the mortgage entirely. The balance owing by you on the mortgage is $100,000. The short sale results in the home being sold for $70,000. Now here is a deficiency of $30,000 and lender has to absorb this loss.

Although it is not common, the lender may decide to turn around and sue for the difference. Most lenders won’t sue for smaller amounts because to do so, they would then have to hire expensive lawyers, file a lot of paperwork and spend more money on the court proceedings. It is all very time consuming and costly. Most lenders today aren’t suing homeowners as there is simply no money to get even if they won a judgment. Most banks will release the owner during the Short Sale if the Realtor or Agent demands it for their client. This is one of the greatest things a good Agent can do for his client.

Here are other options homeowners have:

• Deed In Lieu of Foreclosure. This is an agreement drawn up in advance that states the lender will not sue you for the deficiency (if the form is provided by the lender). You are agreeing to give up the deed to the house in exchange for complete absolution of the difference. It is strongly recommended you get this agreement done.

• One of the other methods is to take a chance on the short sale and to demand to be released at the end of the Shortsale.

• Lastly, some finish a Short Sale and then declare bankruptcy if it all goes bad. Too many owners file bankruptcy when they didn’t need to. My experience is to not file unless the bank is proceeding against you, but ask an attorney for legal advice as I am a realtor and broker and not an attorney. If home sale creates a deficiency that is more than you would ever be able to pay off then bankruptcy may be the only solution. Bankruptcy will scar your credit rating but if you don’t declare and the lender files a judgment, they may have the right to go as far as garnishment of wages. Save yourself the headache and protect yourself from a judgment right at the time of short sale.

In the past, a real estate agent primarily represented the seller. While the real estate agent helped with buying a home, she always gave the seller’s interests first priority. This gave the seller an advantage over potential home buyers.

Today, house-hunters can find buyer’s agents: real estate agents committed to helping home buyers find the house they want and get the best possible deal.

Real estate broker

Some real estate agents work through brokers, independent organizations that sell houses. Agents work with brokers on a contract basis. If you see a house you wish to buy and contact the broker about that specific house, be aware that the real estate agent assigned by the broker will represent the seller. This is in the best interest of both the broker and the seller. Brokers will often handle home inspections, financing and insurance.

If you contact a real estate agent with the intent of having the agent find you a house, she is assumed to be representing you, regardless of any connection the agent has to the broker companies.

real estate agent differences

When buying a house, it makes sense to use a buyer’s agent. A buyer’s real estate agent will work to get you the home you want at the best possible deal, as opposed to a seller’s agent, who will be concerned with getting the best price for the property. A buyer’s real estate agent can be expected to:

• assist you throughout the entire process
• calculate the market value of the house compared to the seller’s asking price
• have professional home buying certification
• maintain confidentiality and loyalty
• take your personal needs into account
• tell you about the house owners and why they are selling.

A buyer’s real estate agent should be willing to provide you with a list of the property’s drawbacks as well as its advantages. The agent should help you decide whether to accept an offer and advise you on real estate contracts during your home buying experience.

Finding the right real estate agent

Buying a home is complicated, so being comfortable with your real estate agent is important. Take the time to interview several prospective agents. Asking the following questions may help you decide if the real estate agent is right for you.

• Can you provide references from previous clients?
• Do you arrange house inspections, house appraisals, and insurance?
• Do you sell houses as well as help with home buying?
• How many buyers do you currently represent?
• How much experience do you have in home buying?
• What real estate broker are you affiliated with?
• What types of property are you familiar with?
• What’s the average cost of purchases you arrange?

A real estate contract is complicated. A good buyer’s real estate agent can explain all the details and let you know where and when negotiation is appropriate. Finding a good agent was once as difficult as finding the right home. Today, all you need is a computer, access to the Internet and a few clicks of the mouse.

The development of a real estate contract begins when you finalize the price and terms with the home seller. The process ends at closing, at which point you take possession of your home. You should review a standard real estate contract with your agent before you view any houses so that you know what to expect once you make an offer.

making an offer through your real estate agent

The first step in buying a home is to make an offer on a suitable property. Your real estate agent should provide you with a market analysis detailing the selling price of similar houses in the neighborhood over the last year. This information will help you make a fair offer.

This is where your needs will come into play. Your real estate agent will assume you want to buy at or below market price, and will bargain accordingly. If you’re willing to compete with other potential buyers and pay the asking price or higher, let your real estate agent know: this will influence how she negotiates your real estate contract.

consideration when developing a real estate contract

Discuss the following points with your real estate agent when negotiating a real estate contract:

• Is there a mortgage escape clause? If there isn’t, you will be legally required to purchase despite financing.
• Is the seller willing to offer concessions such as a roof repair or paint allowance?
• What appliances and fixtures are included in the price?
• Who pays for transaction costs (brokers commissions, lawyer or escrow fees)?