There is a Short Sale buzz taking place currently. A seller in a short sale predicament will find that this buzz will be short-lived. Many professionals claim that a short sale is better than a foreclosure. I will show how this can be dead wrong…
-A short sale is the sale of your home for less than the balanced actually owed.
-A foreclosure is where the bank pursues legal action to take back your property and all equity.
When you start the short sale approval process the bank will require you to send them a financial statement. The bank will also require you to be behind on your payments to even be considered for a short sale. The approval process can be an extremely frustrating experience. Once you have entered into the short sale process you are now dealing with the banks loss mitigation department. In short you are dealing with attorneys now. There is a chance this department could deny your short sale application. You must meet their requirements to get a short sale approved.
Let’s assume you are approved. This approval does not guarantee all offers on your home will be accepted. The short sale approval process means they will allow the sale of your home for less than what you owe. The next stage of this entire process is getting the bank to accept an offer from an actual buyer. When you get an offer on your home this process will take about 45 days to get an answer.
During this ordeal your credit score is dropping because you are no longer making your mortgage payments. There is also a slight change you will not get approved for this short sale process anyways. The reason you are signing up for this process is because you were told a short sale is better than a foreclosure right? Here is what you have not been told….
I would assume you are avoiding a foreclosure on your record so you can buy a home in the near future. Well, 99% of all short sale participants receive a 120 day mortgage late payment on their credit report. Did you know in the eyes of a bank this is considered a foreclosure anyways? I bet no one told you this. Well I will be the first to tell you. My professional opinion short sales are only beneficial for the bank and the real estate agents involved. The agent gets commission for the sale, and the bank gets the potential mortgage problem off their balance sheet.
So don’t fall for the short sale pitch, in the end a short sale is not as beneficial as some claim. There is however a slight chance you could sell your home before you get a 120 day late payment. The likelihood of you selling your home in a couple of months in this current market is slim to none…..
Author: Mike Clover