If you’re a real estate TV buff, you might have heard about short sales before. But few people truly understand how to sell a home through a short sale or why they might want to consider doing so. While it may not always be the top way to sell property fast, for those who are facing dire financial situations, it can be an advantageous option. We’re answering some FAQs regarding short sales below.
What is a short sale and how does it work?
A short sale involves selling your home for less than the remaining balance of your mortgage. By selling your home in this way, you will be able to pay off at least a portion of your mortgage balance, if not the entire balance. You’ll need to prove to your mortgage lender that you’re unable to make payments owed due to a financial hardship. You must provide a letter of authorization and other types of documentation to show you are experiencing severe economic struggle. If your lender agrees, they’ll approve you for a short sale. They will then work with you and your investor or agent to set the price of your home, negotiate and review offers, and finalize the sale of your home.
Why would I sell my house through a short sale?
Just last year, there were 956,964 home foreclosure filings and 203,108 home repossessions in the United States. More Americans are facing more financial stress than ever before and the consequences can be extreme. If you are unemployed, going through a divorce, dealing with health problems, can’t modify your mortgage, are behind on your payments, and/or simply can’t afford your home any longer, this may be an option to consider. By pursuing a short sale of your home, you can potentially avoid foreclosure and bankruptcy, enabling you to get back on your feet more quickly.
Are there benefits to selling a home this way? What about drawbacks?
There are definite pros to pursuing a short sale, but there are some cons, too. As with any major life decision, you’ll need to consider your options carefully and may want to consult with a lawyer, investor, or agent before making a choice. In addition, those who want to know more about how to sell a home through a short sale should work with experienced professionals.
As far as advantages, you’ll be able to reduce or even eliminate your mortgage debt. You’ll also sustain less damage to your credit score (as compared to foreclosure) and this decision will often look better to lenders overall. You may even be able to obtain certain mortgages for another home way sooner than if you went through foreclosure, which means you won’t need to rent a place to live for nearly as long. Short sales will also stop foreclosure proceedings, which can give you more time to figure out your next move.
That said, short sales aren’t a perfect solution. If you’ve already begun bankruptcy proceedings or have not yet received a notice of loan default, you won’t be eligible for a short sale. You may also have to pay taxes on the amount of your loan that the bank forgives, depending on your area. In addition, if you want to know how to sell a home really quickly, short sales aren’t always the answer. They can take up to 120 days or even longer, which is why some people choose to sell their homes through an investor if they can.
What should I do if I need help selling a home due to financial limitations?
If you are facing undue economic hardship and don’t know where to turn, you may think foreclosure may be your only option. But the reality is that this will demolish your credit and can leave its mark on your life for at least the next decade. There are alternatives to foreclosure that may be much better for both your current situation and your future. Whether a short sale is the best option for you or not, we’re here to help with creative solutions. If you’re wondering how to sell a home through a short sale or with help from an investor, get in touch with us today.