A short sale is a common path for a foreclosed property. If you are wondering how does a short sale work, this will answer your questions and explain why this may not be the best solution for foreclosure.
What is a short sale?
A short sale is when the mortgage company or bank accepts an offer on a property for an amount that is less than what is owed on the mortgage. The seller is “short” the amount owed on the loan. This sounds like a great deal for the buyer, but it is one of the more complicated processes to go through in a real estate transaction.
How does a short sale work?
A short sale follows the typical real estate transaction process with the property being listed, receiving offers, and accepting the offer. But the acceptance of the offer is where the complications occur.
Because the lender is accepting an amount less than what they are owed, there is a longer review and acceptance period. Many times, this process can result in a deal falling through. That creates problems for both the seller and the buyer.
When do people usually do a short sale?
Typically, short sales happen for properties that are in foreclosure. The lender is trying to recoup as much money as they can on a loan. Many buyers are wary of short sales because they are well-known for being problematic for the buyer. Realtors are also not fond of short sales because they require more work and can end up resulting in a lost sale.
Is a short sale a good way to get out of foreclosure?
This is a complicated question when it comes to short sales. If you are able to successfully short sale your property, you are able to avoid foreclosure.
BUT a short sale still negatively impacts your financial record. Your credit will still take a hit but not as bad as with a foreclosure. For this reason, a short sale is not the best solution when it comes to getting out of foreclosure.
The other problem with a short sale is the risk that the lender may not find an acceptable offer, resulting in foreclosure anyway.
What is a better option than a short sale for avoiding foreclosure?
There is only one option that is better that a mortgage assumption and that is what we do here are Freedom Foreclosure Rescue. Our process benefits both sides of the deal–you the owner and the bank.
You are able to get of foreclosure much faster than by going through a mortgage assumption and the bank doesn’t have to do any additional work on originating a new loan or modifying the existing loan.
This makes it the best option because your foreclosure problem gets solved very quickly, you get the maximum value for your property and we help you with your moving. The bank receives the full delinquent amount they are owed and they continue to receive the monthly payments.
Freedom truly offers the only win-win solution.