You would think that we had exhausted the short sale dilemma but not hardly as I still get questions each week about whether someone should just walk away or try their hand at short selling their home. In most cases although it is a test in patience a short sale may be a better option for a seller and sometimes a buyer as well. (will address buyer advantages next week)
Many in the Mortgage industry agree that people who agree to a short sale with the lender do far less damage to their credit rating than those who go through foreclosure. In addition a short sale will usually sell for a little more than a foreclosed property and not do as much damage to the neighborhood values.
Although a delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate.
Short sales show up on a credit report as a “pre-foreclosure in redemption” status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as “discharged.” People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. If the seller wants to buy a home in the future the short sale process is a better option.
Homeowners cannot simply use the short sale process as a get out dept free card as they have to qualify due to financial hardship or other factors prohibiting them for paying for their home. The lender must also agree to it but usually a lender looses far less on a short sale than he would in a foreclosure process. The seller who is considering a short sale must be able to prove: that you have no other financial resources to pay the mortgage, and that the sale price the buyer is willing to pay is the fair price the market will bear. Trying to get a BELOW market price for short sale will impede the process and possibly stop it dead in the tracks so listen to the advise of your trusted Realtor for a successful conclusion.
Stay tuned next week when we find out why a short sale may be a good option for a buyer as well. In the meantime enjoy all the blessings out there and remember what good ole Zig says, “You can have everything in life you want if you just help enough other people get what they want”
One thought on “Short Sale: The Lesser of Two Evils”
My wife and I are planning to move to your area. We are debating on weather to rent or buy first. We don’t know the area completely since we are not native. What is your take on this? We want to down size from this house we have now. It is just my wife and myself and of course our kids.Yip & Yap. You can see our house at http://www.utahrealestate.com MLS# 919980 find us a buyer
OH yea we don’t want to live on the beach Lynn Haven is NICE