Real Esate Blog

July 28th, 2008 4:53 PM
Is a "short sale" the answer for you?? Exactly what is a "short sale"? Good questions for many sellers in this tough market. First of all, a "short sale" is when the mortgage holder on your home agrees to accept less than is owed on the mortgage, somtime forgiving the excess debt, so you can get free of your obligation. If a lender will agree to forgiving the shortfall, this route will have much less negative effect on your credit than a foreclosure. But a lender does not have to accept a short sale and many will not, forcing a foreclosure instead. In order to get a lender to accept a short sale, you will have to prove circumstances have caused you to be late or past due on your mortgage. Usually accepted reasons are, divorce, illness, or loss of job or income. If none of these exist then the lender will not likely accept anything short of the full amount owed. And you will have to PROVE one of more of these circumstances exist before they will even consider a short sale. Sorry, your word is simply not enough. Also required will be an appraisal showing the current value of your home, and most lenders will not accept a short sale for less than appraised value. All this can take considerable time and if you find a buyer, the buyer may not be willing to wait for this extended period of time. By the way, with some lenders, you must find a "qualified" buyer before you can even start the process. One thing you will need to watch out for in this situation is that all lenders who agree to accept a short sale may not be willing to let you off the hook for the shortfall. You could still end up owing the unpaid balance which will live on your credit till it is paid. If you decide to try this escape route be very careful and expect it to be a long drawn out procedure. But in some cases it just may be the answer to a problem.
Posted by Phil Turner on July 28th, 2008 4:53 PM
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