Is a Short Sale For You?

5 Things You Should Know if You’re Considering A Short Sale of Your Home

Three years ago, the term “short sale” was almost unknown by anyone but some experienced Real Estate agents. Today, the term is on the tip of everyone’s tongue — from homeowners to investors to agents to buyers.

For sellers wondering if a short sale is the right solution for them:

1.         This is not a do-it-yourself process —

  • Seeing a short sale to a successful close is a complicated transaction requiring approval from not just the buyer and seller, but also the loan servicers involved.
  • Find an expert Realtor with experience in short sales; make sure the Realtor has not only listed short sales, but successfully closed them.

2.       Different lenders have different policies —

  • Every lender has different policies and attitudes toward short sales.
  • A Realtor familiar with your lender is a distinct advantage in reaching the best outcome.

3.       Your Realtor can help you determine if a short sale is the best option—

  • Do you meet the necessary hardship requirements?
  • Does your lender have a history of approving short sales?
  • What are the market conditions in your neighborhood? How does your home compare?

4.       You can prepare for the sale in advance —

  • Put and keep your home in buyer-ready shape.
  • Ask your Realtor for suggestions to make your home as attractive as possible to potential buyers.
  • Ask your Realtor to pre-negotiate the short sale with your lender if possible.

5.       There are risks and advantages

  •  Your mortgage payments are still due to the lender during the short sale process. Depending on the lender, new arrangements can sometimes be negotiated.
  • A short sale has a negative impact on your credit rating, though less of one than a foreclosure.
  • If your short sale is successful and forestalls foreclosure, you will be able to reply no when asked if you’ve ever been foreclosed upon.
  • Your lender may pursue a “deficiency judgment” in the future to collect the forgiven debt. Some states have anti-deficiency laws, but more than 30 states allow deficiency judgments.
  • If possible, your Realtor should negotiate deficiencies away. Regardless, make sure you fully understand your current and future exposure and obligations.

To read more about the pros and cons of selling your home short, visit these resources (remember, rules, policies, regulations and requirements vary state by state and lender by lender so review everything with your Realtor for the most accurate information):

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