The Short Sale Phenomenon
Short sales have often been mentioned as a way of getting a really good deal in the current climate, even better than those on offer due to foreclosures.
What defines a Short Sale?
Basically a short sale is where the homeowner cannot afford to make any more mortgage payments, which means they have defaulted on their mortgage. Only once this happens will the lender consider a short sale.
So when a short sale occurs, the lender is prepared to accept an amount for the house which is less than the existing mortgage, hence the “short” element of the sale.
To get a lender to accept a short offer will depend on many factors such as how much you can put down, how much you are borrowing, how quickly you can close and if you will be able to get a mortgage.
Short Sales via Experience
It is vitally important that you work with an agent that has experience of short sales, and knows which houses are on offer for short sale. Many short sales will not be on offer to the public, so you need to know that your partner has connections so you can snap up these bargains.
Who Qualifies for a Short Sale?
It’s not as easy as just asking your lender for a short sale if you cannot pay the mortgage. You have to provide other proof such as a hardship letter, bank statement and other information; many sellers will need to be convinced that you cannot afford to make payments before they agree to a short sale.
How long does it All Take?
A short sale will take much longer than a traditional a sale, sometimes as much as 6 months, so even if the seller has accepted the offer, nothing can be done until the lender accepts.
Choices – Short Sale or Foreclosure?
If possible, it’s best to go for a short sale as this will have less impact on your credit rating than a foreclosure. It is imperative you work with professional and trustworthy people when considering your options between short sale and foreclosure.