Short Sales: How They Benefit the Seller

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There are many reasons why you might suddenly find it challenging to pay your mortgage every month. Perhaps you were injured and had to take an extended time off from work. You may have even become permanently disabled, or maybe you got divorced or experienced the death of a spouse. Regardless of the reason(s) for your newfound financial troubles, you are undoubtedly wondering what your options may be at this point.

If you want to keep your home, and think you may be able to afford it if your payment was just a little bit lower, you may benefit from a mortgage refinance. Maybe your overall debt level is sky high and you see no way out – you can file for bankruptcy and start fresh with a brand new blank slate.

If meeting your mortgage payment every month is your main struggle – it may be in your best interest to sell your house and move somewhere more affordable. However, the (often) lengthy time homes spend on the market may be longer than your finances will last.

In this situation, you may qualify to list your home as a short sale property. A short sale involves selling your home for less than the amount that you still owe on your mortgage. In order to qualify to sell your home in this manner, you’ll have to show your lender that you’ve suffered a hardship – like job loss, decreased income, divorce, spousal death or disability.

You’ll create an agreement with your lender about what will happen after the home sells. In many cases, your lender will agree to discharge the leftover debt that remains after the short sale. This means you will owe nothing, and you will no longer have any responsibility toward that mortgage – allowing you to move on.

One of the best things about short sales is that they offer distressed home owners a foreclosure alternative. Foreclosure is definitely the right choice for some people, but for others, a short sale can accomplish the same thing without the negatives that come along with a foreclosure being placed on your credit report.

Mortgage experts say that a foreclosure can cause your credit score to dip up to 250 points below its current number! On the other hand, a short sale appears on credit reports as a “pre-foreclosure in redemption,” and typically only lowers your score by around 100 points.

If you go through with a short sale, you will most likely be able to qualify for a new mortgage that is more affordable with a good interest rate in as few as 18 months.

An additional reason to consider a short sale: relocation incentives (read: ca$h!!!) are frequently offered by some lenders to short sellers. This will give you enough money to start over after your (too expensive) home is sold.

On top of the cash incentive, you should know that short sellers aren’t always required to pay their attorney’s fees or real estate broker’s fees. It is possible to negotiate these fees into the short sale agreement so that they will be paid for by your mortgage lender.

Although the new millennial home owners may typically associate short sales with the 1990s, the current market is once again seeing many short sales being approved. To learn more about your options, contact Veitengruber Law for a free consultation via telephone or in-office.

Image credit: Got Credit
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2 Responses to Short Sales: How They Benefit the Seller

  1. Pingback: After the Short Sale: What is a Deficiency Judgement? | Veitengruber Law

  2. Pingback: My Home has a Short Sale Offer; Can the Bank Still Foreclose? | Veitengruber Law

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