Understanding the Short Sale Process (Part 1 of 2)
What Is A Short Sale?
A short sale is the sale of a property for less than what the owner still owes on the mortgage. A short sale is an alternative to foreclosure when a homeowner needs to sell and can no longer afford to make their mortgage payments. The lender agrees to accept less than the amount owed to pay off a loan now rather than taking the property back by foreclosure and trying to sell it later. Lenders agree to a short sale because they believe it will net them more money than going forward with a lengthy and costly foreclosure process.
Can Any Real Estate Agent Effectively Handle My Short Sale?
No. A short sale is a very complicated real estate transaction and one that has very important implications for you. More than any other type of residential real estate transaction, a short sale should be handled only by a real estate broker who has substantial experience with the short sale process , and a strong track-record of success in negotiating short sales for their clients. You wouldn’t have your family doctor perform heart surgery. And, you shouldn’t expect any real estate broker to be qualified to handle this highly complex real estate transaction for you.
Why Should I Choose A Short Sale Over Foreclosure?
Whether you should do a short sale or let your property go to foreclosure depends on several factors. In most instances, a short sale makes more sense than foreclosure. In general, when you want to obtain a loan to purchase a property in the future, more opportunities will be available to you if you do a short sale. And, contrary to popular belief, you can be current on your payments and still do a short sale. In fact, if you are current on your mortgage through a short sale, you can qualify for an FHA loan afterwards without any waiting periods. The same option will not be available following a foreclosure.
While doing a short sale will negatively affect your credit, there are many benefits to choosing a short sale over foreclosure. With a short sale, you are in control of the sale, not the bank. You may sleep better at night knowing who is buying your home, and you can spare yourself the social stigma of foreclosure.
Every homeowner’s situation is different, so we always recommend that you speak with a real estate attorney that can advise you on the legal and tax implications for your circumstances.
Will I Get Any Money From The Sale?
Unless specifically authorized through a federally-sanctioned program such as HAFA, when a lender approves a short sale, they typically require that the borrower (seller) not receive any money from the sale of the property since the lender is going to take a loss on the loan.
Can I Keep The House Through A Short Sale?
The purpose of a short sale is to get the property sold, so you do not keep the house. Just as in a normal sale, you will be moving, typically when the sale closes. Some sellers choose to move before the house closes. You will not be allowed to remain in the house. If your intention is to remain in your house, you should consider other options besides a short sale.
Why Use DPS Network
DPS Network has a team of real estate experts with over 50 years of experience with buying and selling of real estate including both short sale and foreclosures, real estate mortgages, and real estate mortgage litigation, and together we can offer that knowledge and experience to help alleviate the pressure and help our clients achieve their goals.