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Short sales are very prevalent in the Topsail Island area as the market value has dipped below 2005 values.
Short Sales for Buyers
This offers an opportunity for real estate buyers in the Topsail Island area to buy properties at current market value that sold for 100,000s of dollars more just a few years ago. A short sale allows the buyer to take the property with no liens other than the liens the buyer must take to make the purchase ie., the buyers morgage.
Short Sales for Sellers
When you execute a short sale you are basically selling the property at current market value which is less than owed so the lender must agree to allow the sale to take place and hopefully claim a loss on the difference between market value and money owed. However, this is not always the case.
Some bank mortgages are “recourse mortgages” which allow the bank to issue a judgement against you for any unpaid balances on the loan even though they approved the short sale and allow it to take place. On the other hand, non-recourse loans do not provide this option for the lender.
An example of the verbage you would like to see in a short sale transaction for example would be:
“as full and final satisfaction of the first mortgage indebtedness on the above-referenced property.”
However if you encounter verbage similar to below (all or a portion) the lender may seek a judgement against you for the unpaid balances:
“the lien will be released” but it “reserves the right to collect the remaining balance on your note after application of the net proceeds from the sale.”
It is important to understand these differences or you may have a surprise on your hands a little later. Consult your real estate attorney for more information.