We owe more on our house then it is worth and need to move out of state immediately. We’re trying to figure out our options and I’m wondering what is the difference between a deed in lieu vs. short sale? I was thinking of asking the bank about doing a short sale, but then I read about this other option and before I ask the bank, I want to know the comparison of a deed in lieu vs. short sale so that I can make things easier for my husband and I before we move.
Answer: (1)
Understanding a deed in lieu vs. short sale is very important to homeowners who are facing an upside-down mortgage. A deed in lieu means that you give the lender back the deed to the house and allow the lender to sell the house. A short sale means that you try to sell the house yourself, you get an offer for less then what it is worth, and you then to the lender and ask them to accept the amount of the offer as full satisfaction of your debt. Some lenders will agree because they know a short sale is better then a foreclosure. While a deed in lieu is faster since it puts the onus on the bank to sell the house, if they end up selling it for less then what you owe, they can potentially come after you for the difference in a proceeding called a deficiency judgment. Thus, the main difference of deed in lieu vs. short sale is that deed in lieu is easier but may be riskier. If you need help deciding which is the best option, you should contact a lawyer experienced in short sales and deeds in lieu of who can help you make a decision on a deed in lieu versus short sale.
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Posted by Christy Rakoczy on 22 Jan 2010