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What is a short sale?

You’ve heard the term foreclosure in the news but you might not have heard the term “Short Sale” as much (though it’s pretty prominent in advertisements these days). So what is a short sale? A short sale is simply the term given when a lender accepts less than the total amount due. That’s the short (no pun intended) description, but there’s more to it than simply a dollar figure.

Short sales can be difficult but it might be better to go through it in the long run. As of lately, it’s becoming a new trend vs. REO’s due to the fact banks are now participating on expediting the process. In a future post, we’ll discuss short sales vs. foreclosures, but for now, let’s simply look at the nitty gritty involved with a short sale. As mentioned, a short sale is when a lender accepts less than the actual amount. The key point there is that the lender has to accept it — not all lenders do, and in many cases, it takes persistence in negotiations to get it to work.

Ok, so how do you get a short sale accepted? It is ultimately up to the lender, but in general, these are the qualifications:

-The home value has dropped. This criteria isn’t particularly hard to meet these days.
-The mortgage is in or near default status. This is similar to a foreclosure, and in many ways, the short sale is the alternative out of foreclosure.
-The seller faces difficult life changes. This can be anything from a change in marital status, death of a spouse, expensive medical treatments, etc. This change must be fully documented and submitted for approval.

Like foreclosures or bankruptcy, a short sale will affect your credit score, usually by 200-300 points if you miss payments and go into default. However, it’s important to note that many types of official paperwork won’t necessarily inquire about a short sale while they may ask about foreclosure/bankruptcy, so that’s something to keep in mind.

If that’s the path you want to explore, it’s important to find an agent that specializes in the situation. The agent will help find the best balance that works for the lender and the homeowner, along with guiding you to a buyer.

Search for foreclosure homes www.bestreohomes.com

The views published here are the opinions of the writer and are not a substitute for legal counsel.


Posted: Thursday, March 4, 2010 2:50 PM by Israel and Rachel Gonzalez

Comments

pannes said:

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# April 13, 2018 6:26 PM
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