How To Avoid Foreclosure With a Short Sale
What Is a Short Sale?
A short sale is when a borrower is unable to make mortgage payments and is forced to sell the home while the proceeds are less than what is owed to the lender. When this type of sale happens, the bank suffers a financial loss and the borrower can walk away from the liability. Foreclosures are much more expensive to transact than short sales, and for this reason, most banks prefer short sales over the alternative.
Borrowers do not have to be behind on mortgage payments in order to conduct a short sale; they must simply be experiencing financial hardship. Both the lender and the borrower prefer to conduct the sale as quickly as possible. An inexperienced real estate agent can extend the process unnecessarily or fail to close altogether, resulting in that highly undesirable foreclosure. A skilled short sale agent will finalize the short sale procedure quickly and sell the home in about two months.
Reasons for Needing a Short Sale
If the property value has declined below the mortgage balance on your home due to a falling housing market and you are finding yourself unable to make your mortgage payments, you are a good candidate for this type of sale. If you are experiencing hard times in terms of illness, death, unemployment, or divorce, you are also a good candidate for a short sale.
Another common scenario allowing for a short sale is created by aggressive secondary lending practices. During housing bubbles, lenders sometimes offer secondary mortgages that equal more than the house’s value. Having a knowledgeable real estate agent is critical for navigating this complex case.
Whatever your reason for needing a short sale, be sure to hire a skilled agent who is knowledgeable in this tricky process in order to minimize stress and expenses.