What is a Short Sale?
Many homeowners are asking "what is a short sale?" Rumors are flying around the Internet suggesting everyone who is struggling to make ends meet can sell their home for less than they owe and walk away from their property. While there is a portion of truth to this, borrowers must meet certain criteria before being allowed to short sell their home.
Today, I would like to provide an overview of what is a short sale to clear up any confusion you may have. 'Short sale' is a real estate industry term used when a lender accepts a discounted payoff on a mortgage loan. Short sales offer homeowner's who have defaulted on their mortgage an opportunity to sell the home for a lesser amount than is owed and avoid foreclosure.
Not all lenders are willing to engage in short sales. Those who do, generally have their own set of procedures. Some may require the seller to work with a real estate agent. A few will accept the short sale as full payoff, while others require borrowers to pay the difference between the short sale and the balance due on the mortgage note.
When a homeowner owes the difference between the mortgage balance and the discounted short sale, it is known as a 'deficiency judgment'. The judgment is reported to credit bureaus and remains on the homeowner's credit report for 7 to 10 years; even if it has been paid in full.
Before entering into a short sale agreement it is imperative to convince the lender to accept 'payment in full without pursuit of any deficiency judgment'. This document allows the borrower to turn the home over to the lender and be clear of debt on the home.
Short sales are a last resort and generally entered into only after all other options have been exhausted. The borrower is required to provide a short sale hardship letter to the lender, explaining the circumstances that caused him to default on the loan. Lenders are usually more willing to work with individuals who defaulted on their mortgage due to loss of employment or health problems than someone who lives beyond their means.
Real estate experts recommend working with a professional realtor who possesses short sale experience. An experienced short sale agent can help expedite your transaction and protect your interests.
Although you will not be able to retain ownership of your home, a short sale is a good option if it is negotiated properly. If you're currently facing foreclosure, but have not yet been served papers by your mortgage lender, you may qualify to short sell your home.
To learn more about your options, fill out the "we buy houses" form to provide details of your property. I will contact you upon receipt of your information to further discuss available options.
Tagged: Buying a Short Sale Home, Does a Short Sale Hurt Your Credit, Foreclosure, How Does a Short Sale Work, Investment, Short Sale, Short Sale Hardship Letter, Short Sales, Should I Buy a Short Sale, We Buy Houses, What is a Short Sale
Published on July 30, 2009 at 02:04 AM
| | Printer friendly