Benefits of short sale over foreclosure
Nobody on the signing day of his own home imagines that one day he or she will face the foreclosure. But the downturn of economic and real estate market crash turn homeowners towards the distressing process of losing their homes. The foreclosure process can be long, stressful and severely damaging to the homeowner savings, property and credit. It is a very frightening situation for homeowners.
A Short Sale Is A Better Option
In the situation of foreclosure there is another option for homeowner, which is called short sale. A short sale is a transaction in which the bank lets the offending homeowner sell his or her home for less than what’s he or she owed. The borrower finds an agent and puts the house on the market, often at a considerable discount. A short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. Banks have been doing this practice for several for years. Recently due to the current state of housing market and economy, this process has become a part of public consciousness. A short sale could ruin your credit rating. It might not happen right away, but sooner or later, unless the bank has specifically agreed not to report the shortage, the bank may report it as a Score Factor Code 22. That score factor relates to delinquencies, deprecatory records and collections. Real estate agents should not give legal advice to clients facing foreclosure nor suffer adverse affects. Those who insist on this practice may find themselves facing a process server down the road and be praying that their errors and omissions insurance will cover them.
To be eligible for a short sale you first have to qualify:-
To qualify for a short sale:
- Your house must be worth less than you owe on it.
- You must be able to prove that you are the victim of a true financial hardship, such as a decrease in wages, job loss, or medical condition that has altered your ability to make the same income as when the loan was originated. Divorce, estate situations, etc…..also qualify.
A short sale does not absolve the borrower from the debt he or she incurred with the original mortgage, but it can be better than a full-on foreclosure. Let’s take a look at some of the major reasons that why a short sale may present a better option than letting your home slide into the long and draining process of foreclosure.
Real estate transactions generate a hurricane of activity between a buyer and the seller, and they are often stressful by nature. But they don’t compare the pressure that a homeowner is under during a foreclosure. Short sales are not exactly risk-free when it comes to the seller’s credit, and they would not completely diminish the financial implications when homeowners are unable to pay for a home that they purchased. But a short sale will open the door to solutions for homeowners that can allow them to avoid legal action and the lengthy, formidable foreclosure process. Short sales can leave homeowners in a much more positive position, reduce their financial burden and rescue their credit to a degree. A short sale can provide a light at the end of the tunnel to homeowners and offer them a platform from which they can start rebuilding financially.
It Can Help The Seller Avoid Scams:
Facing a foreclosure on one’s property is stressful enough and disheartening. But there are dishonest opportunists who are waiting for a chance to swoop on stressed, unprotected homeowners by making matters worse. A number of well-publicized scandals related to foreclosure taken place for last decade. Many scam artists were involved who offer money-back guarantees and promises to save homes from fraudulent deals. Choosing the short sale process will greatly decrease opportunities for scam artists to dig their claws into unprotected homeowners. The short sale process works very much like a regular sale, and the homeowner will get to know the professionals with whom they’re working. This will all but eliminate the possibility of a scam artist becoming involved in the transaction.
It Gives Homeowners More Control:
In a short sale, there are still negotiations, meetings and paperwork for the homeowner to weave through. But the process plays out more like a traditional sale, as opposed to an argumentative and pressure-packed foreclosure proceeding. Any real estate sale can be somewhat stressful, but a short sale will allow the homeowner to play more of an active role in the process and deal mainly with the bank, the homebuyer and the real estate agent. Overall, a short sale is much more manageable for the homeowner than being at the mercy of a bank’s attorneys during a foreclosure.
The purchase of short sales can be advantageous to an investor in a number of ways. Below-market-value buying prices, competitive selling prices and the easy accessibility to information about the home are a few of the incentives. In addition, the increased popularity of the short sale market can present a wealth of opportunities to a quick investor. A short sale investor will also have the latitude to work out deals with homeowners, such as renting their property back to them or setting up a workable plan that may give them the chance to rebuild their credit.
It Presents Opportunities For Agents:
Short sales present a profitable hollow to real estate agents who take the time to understand the process. Capitalizing on the growing number of short sales in many areas can help an agent stand out from other local agents, and it may create a new source of business in the face of a still-slow housing market. Specialized short sale training is increasingly available to agents, and the effort that goes into learning this angle of the real estate market can pay big share.