NJ Short Sales: Explained

NJ short sale

Changes in the economy and instability in the housing market have presented major challenges to homeowners in New Jersey. Homeowners may find they owe more on their house than what it is worth on the market. Sometimes, it only takes one unexpected life event (divorce, illness, disability, job loss, etc.) for homeowners to find they cannot afford their mortgage payments anymore. Making the decision to leave a home is never easy, but the attorneys here at Veitengruber Law are experienced in offering compassionate, competent counsel to achieve a favorable outcome for our clients. As a debt solutions agency, our team is skilled in NJ real-estate transactions and short sale negotiations.

In a short sale, a property is sold for less than the balance owed to the lender. The lender agrees to basically give a financially burdened mortgager a discount on the balance of a mortgage. Short sales tend to be less harmful to credit ratings and comparably quicker than a foreclosure. That being said, the short sale process is certainly not “short” and there is no established legal limit on how long the process should take. There is a plethora of paperwork and fine details to work out in a short sale and the process can take months, or even years. The attorneys at Veitengruber Law have invaluable knowledge and experience navigating the complexities of any short sale to give our clients peace of mind during this process.

The first step in a short sale is to contact a realtor to perform an assessment on your home’s fair market value. Veitengruber Law has strong relationships with area real estate agents experienced in short sale negotiations. After the home has been assessed, the next step is to list the house for significantly less (where the term “short sale” comes from) than the actual value of the home. If effective, the drastically reduced price will drive bids for the property.

In order to agree to the short sale, the bank or lender will need to see evidence of severe financial difficulties. The lender will need to understand why you cannot afford the mortgage payments, whether for medical, financial, or personal reasons. This can be explained in a letter of hardship. The more detailed the letter is, the better picture it will provide the lender of your financial stress.

It is important to note that while a short sale is not as damaging to your credit rating as a foreclosure, the lender is still taking a financial loss and subsequently your credit score will be affected. Typically, short sales will affect a credit report for 7-10 years. However, a short sale shows that you took action before the bank had to intervene, which looks much better to future lenders. There is also another important benefit to a short sale over a foreclosure. In some cases, a homeowner can receive some compensation in the form of relocation costs. So while you will not be making a profit by selling your home, you can receive financial assistance to help you establish a new residence.

The process of short sales in NJ can be intimidating and overwhelming. But you are not alone in this process. Veitengruber Law is here to protect your interests. We serve clients in Atlantic County, Monmouth County and Burlington County. Set up a consultation with us today at our offices in Wall or Bordentown.

Image: “House for sale…” by jongorey – licensed under CC 2.0

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