If you are behind on your mortgage payments, you may wonder whether it is time for your house to become a short sale home. What is a short sale? A short sale is a great alternative to foreclosure. In a short sale, instead of your bank seizing your home in a foreclosure action and selling that house, you work to sell your own home instead. You get an offer from a buyer that is reasonable in light of the market conditions, but that is lower than the amount of money you owe on your house. You present that offer to the bank and ask them to accept a short sale, wherein they get the full amount of the money paid by the buyer and you get to walk away without having a foreclosure.
Should You Sell Your Home as a Short Sale Home?
Short sales are a win-win because
- Your credit is not hurt as badly as it would be in a foreclosure
- You do not have the risk of the bank coming after you and getting a deficiency judgment (which is available in some states to let the bank sue you for any money they can't recoup by selling your house in foreclosure).
- The bank doesn't have to incur legal fees to foreclose
- The bank doesn't have to try to sell the house, which they probably wouldn't be that successful at either if you were unable to sell it.
So, when should you short sell your home?
- When foreclosure is the inevitable other alternative. If you believe you can make mortgage payments until you can get the full amount that you need to pay off the loan or if you believe you can get past the financial rough patch and become current again, a short sale may not be for you. After all, with a short sale, you walk away with nothing and you lose your house.
- When the bank is willing to agree. You can't simply call up the bank and let them know you've sold the home for less than you owe- unless you want the bank to expect you to pay the difference. They have to agree to a short sale offer before you finalize the deal.
Getting Help
Short sales are structured differently than regular real estate sales, and the bank needs to sign off and approve. Because of the complexities involved in short selling your home, when you decide it is the right time to have a short sale, you should consult with an experienced foreclosure attorney who can assist you throughout the process, making sure you do everything right so you don't find yourself facing legal trouble later.
