Short sale of your home emerges as something people may hear about but may not fully understand. This site endeavors to briefly explain the definition of a short sale, introduce some of the elements of a short sale and the short sale process as well as providing more detailed links so that homeowners may understand as much as they can about what is a short sale, if a short sale looks right for them and where to get help to complete a short sale.
Most homeowners in trouble with their mortgage, especially those who no longer desire to keep their property, explore the option of putting the house on the real estate market. Particularly in a down market (like the recent years of 2008-2009 and 1990-1991 and in fact for many cycles of the past and cycles of the future) homeowners calculate that the depressed real estate market leaves them in a position where they could not reap enough money from the sale of the house to pay off the mortgage. Unfortunately, many people stop at this point and give up, sometimes ending up in a foreclosure.
A short sale allows for all parties to benefit from the sale of the home for less than what might be owed on the mortgages. Why would the banks do this? Avoiding mortgage foreclosure stands out as a goal not only for the homeowner, but also for the bank. When a creditor takes possession of a property through a foreclosure they have to pay for its upkeep and taxes and try to sell it. When a bank tries to sell a foreclosed house the industry refers to it as distressed property and an institution might only expect to get $60,000 to $70,000 on a home allegedly worth $100,000. Add the carrying cost of holding the house for 6-12 months and the realtor fees on top of that and it becomes easy to see why the bank would rather get $80,000 now instead of netting $60,000 or less a year down the road.
From the homeowner point of view a short sale allows the people to avoid foreclosure which helps their credit score and makes it easier to rebuild credit as well as dealing with any potential mortgage deficiency. A part of any good short sale negotiation need to include eliminating or reducing the mortgage deficiency the homeowner might owe the bank. In certain cases even a short sale might fail, but the short sale remains a critical part of the homeowner’s end solution because almost any deed in lieu of foreclosure negotiation requires that the homeowner attempt a short sale for 60-90 days as a prerequisite. |
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