Should you consider selling your home through a short sale?
First, what is a short sale? Well, it’s simply when the bank is asked, and then subsequently agrees, to allow the borrower on a home to sell their home for less than what is owed to the bank, and in doing so be relieved of the debt they currently owe to the bank. The buyer is “short”, meaning their home is worth less than what they owe the bank. So in this case, is it better to ask for a short sale, or simply walk away in foreclosure?
When does a short sale work best?
- When your bank is willing to do them. (Hint: Credit Unions often seem willing to work with clients. Larger banks…not so much)
- When your house can sell. (Hint: If you have a great Realtor, and you can stage and price your house to get multiple good offers, the banks seem to have larger ears for your request)
- When you have a very good credit score right now (Hint: A short sale results in the bank reporting to the credit agency that you have “settled a debt” rather than been “foreclosed on.” This settlement often only results in a minimal loss of credit score (70-100 points, e.g.), and may mean that if your score is high now, it will still be very good after the short sale)
- When your hardship is real. (Hint: You must have a good reason that makes you stand out in the crowd. If you’ve lost your job, just had a medical emergency and expense, or suffered through a natural disaster, then the bank doesn’t have to guess about whether your hardship is real….and the willingness to make a deal is greater)
- When you are current with your payments. (Hint: If you’ve missed some payments already, your credit score has already been dinged pretty hard. The lack of making timely payments also puts you somewhere back in the line, with on-time payers at the front of the line in the asset manager’s eyes.)
Want to know more? Click on the “Contact Us” button above. We’ll talk to you, explain the issues, ask some questions, and then do some detective work to see whether your prognosis is good enough to move forward with the short sale.