A "Short Sale" is relatively new phrase to many homeowners, but this type or sale has beenpart of the real estate market for many, many years. Most Realtor's are not up to date withthe process and that has cost much confusion in the community with homeowners and evenreal estate agents. Since I'm a
"Certified Distressed Property Expert,"
I thought it wouldbe prudent to explain and dispel many misunderstandings.
What is a Short Sale?
It's when:
A homeowner is authorized to sell for less than what is owed on the mortgage.
The lender authorizes or accepts the sales price as a payoff.
The seller avoids foreclosure and many times they can also avoid a judgment.
The seller avoids a negative report, by the lender, to the credit bureaus.
The seller won't get any money at closing, but they will avoid the emotional toll
Foreclosure can cause. The negotiations include a favorable wording for theforgiven debts on the mortgage that can help the recovery of the homeowner.
Why would a lender agree to lose money?
Financially, it's a smaller loss to accept a short sale than it would be to incur theadditional expenses of a foreclosure.
Lenders are in the business to lend money not home ownership. The moreresources they have tied up on a property the less they have to lend out.
With prices dropping so rapidly, even if the lenders decide to foreclose they willlose even more money when they finally try to sell the property later rather thansooner.
How does a short sale help me?
It helps you avoid an emotionally draining foreclosure process.
Avoiding a foreclosure with help save your credit. Typically a foreclosure willdrop your credit score up to 200 points per loan.
Avoid having a foreclosure on your credit report anywhere from 7 to 10 years,which affects your future purchasing power and interest rates.
It could help you avoid a "deficiency judgment" from the lender after theforeclosure as they try to recuperate their lose
But I've already received my foreclosure notice, is it too late for a short sale?
The short answer is no, but there are a few variables that can affect the foreclosuretimeline.
A qualified Realtor or better yet, a Certified Distresses Property Expert can helpyou extend the foreclosure timeline up to 6 months and in many circumstances upto 7 or 8 months.
A sale of a home can be done and approved up to the day of the bank sale orauction of the home.
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