What Is A Short Sale?

The definition of a short sale is… “short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt” (source: Wikipedia)

In some cases that are rare today, a short sale is an option that was agreed upon by the borrowers and the lenders as a way to Avoid Foreclosure. In a short sale, the house is sold for less than the outstanding balance of the mortgage. The unpaid balance (known as the deficiency) may or may not still be owed by the borrower.

This option typically takes some time, as multiple lending institutions may own the mortgage. All parties who have a stake in the property must agree to the terms of the sale, and a potential deal could fall through if even one lender doesn’t agree.

As property values have risen, the frequency of Short Sale approvals by Banks and Mortgage Companies has fallen. The Banks have never been a fan of Short Sales and unless there is a compelling reason for them to agree to one, it is becoming more and more rare in today’s real estate market place.

Short Sale vs. Foreclosure – Your Options

Keep in mind that Short Sales were created as a way to Avoid or Stop a Foreclosure. They are mutually exclusive in their application and a homeowner facing a foreclosure can elect to implement a strategy to Stop Foreclosure that includes the sale of the house. The Strategy relies on a rather quick time frame to list, market , sell, gain bank approval and close the transaction all within a 120 day time frame with the hope of beating the Foreclosure process.

While Short Sales were somewhat successful in Stopping Foreclosure 2 to 3 years ago, their effectiveness has virtually been stopped as Banks are no longer dragging their feet with Foreclosures.

While both options have adverse effects and ramifications on a homeowners credit, a short sale often has less of an impact on the borrowers creditworthiness. A foreclosure could impact a borrower’s credit score by 300 or more points, where a short sale may only dent the credit score by 100 points.

Borrowers who are foreclosed on are often ineligible to purchase another home for at least 7 years with a traditional mortgage, where under certain circumstances, a short sale borrower can purchase within 2 years.

As many Americans struggle with an economy that has yet to completely recover from the 2008 crash, homeowners continue having a hard time making monthly mortgage payments. Choosing between being foreclosure and initiating a short sale (or a 3rd option…  selling your Stockton house fast  )is an easy choice for a borrower having troubles paying their mortgage on time.

Sometimes, lenders are willing to work with borrowers to complete a short sale, to avoid the fees and time consuming process of conducting a foreclosure.

Our suggestion is always this.

  1. Talk with your lender and discuss ways that they can work with you on your loan. We offer this service where we can help guide you in the right direction if you run into issues with your lender… just reach out to us on our Contact page and we’ll discuss your situation.
  2. Attempt a short sale or other program your lender may have that forgives part of your loan, creates a new / more affordable monthly payment so you can get back on your feet, etc.
  3. If the bank isn’t willing to work with you very much… your best option may be to sell your house. Work with a local real estate house buyer service like Westbrook Stops Foreclosure to sell your house fast for an all-cash offer. If you’re interested will look at your situation and make you a fair offer on your house within 48 hours. Just fill out the form on our website over here >>
  4. Foreclosure. Last resort is to let the house fall into foreclosure. This is the worst possible scenario. It’ll harm your credit and you could still be left with money owed to the bank even after the foreclosure is finished.

By knowing your options, you may be able to dodge a significant impact to your credit score, allowing you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so if you have the opportunity, a short sale can be the better option.

Have a pending foreclosure?  We’d like to make you a fair all-cash offer on your house.

Give us a call anytime at (209) 481-7780 or
fill out the form on this website today! >>

5 Ways To Stop or Avoid Foreclosure In Today’s Market – FREE Guide:

Need more information on the foreclosure process and How To Stop Foreclosure?  Download our FREE Stop Foreclosure Guide here. Or, you can always feel free to Contact us anytime if you have questions, want a no hassle Situation Evaluation, or want to just learn more about how we can help homeowners avoid foreclosure or sell unwanted properties for cash.

We are Foreclosure Specialist and can help you Stop Foreclosure Now. If you live in Stockton, Sacramento, Lodi, Manteca, Modesto or Tracy and need to Avoid Foreclosure or sell your house fast, Call us … we’d love to help you formulate that plan. There are no Fees to pay. You’ve got nothing to lose 🙂