Short sales are complicated and many short sale transactions fail. According to some estimates, 49.4% of short sales fail, compared with 17.9% for foreclosures and 13.1% for traditional sales. Yet there are benefits to having a short sale as opposed to foreclosure or deed in lieu where the bank recovers your house.
First, short sale is a way to avoid the stigma of foreclosure. Also, by going through a short sale, sellers can avoid to come up with thousands of dollars to make up for the difference they owe on mortgage. That is, federal government aids facilitate the lender forgiving the balance on the loan for a short sale seller.
Are you considering a short sale? Here are the five short sale frequently asked questions and their answers.
- Can any real estate agent handle a short sale?
No. As mentioned above, short sales are complicated. More than any other real estate transactions, you need a qualified professional. You need an agent who has successfully completed many short sale transactions, someone who is a very good negotiator. Not all real estate agents are qualified to handle the complex short sale process.
- Why should I choose short sale over foreclosure?
In many cases, a short sale is more beneficial than a foreclosure. And it’s not only about your credit but foreclosure can bring with it a social stigma which you will want to avoid. Here are the perks of short sale over foreclosure:
- Short sale will affect your credit. But the effects of foreclosure on credit lingers more than that of short sale. Also with short sales, you will be presented with more options whenever you want to reenter the market.
- You are in control of the sale, not the bank. You can sell your house to whomever you wish to sell it to.
- Depending on tax laws in your area and your circumstances, banks will forego the balance you’re supposed to pay after selling your house in a short sale.
- How do I know if I qualify for short sale?
Basically, to qualify for short sale, you need to fulfill the following conditions:
- You owe more on your mortgage than your home is worth
- You’re willing to sell
- You have a financial hardship that’s making it hard to make payments
These are the basics. You need to speak with an attorney or real estate agent to know what applies in your area.
- Will I get any money from the sale?
Since the lender is the one taking a loss, don’t expect to get anything from the sale unless specifically authorized by federal programs such as HAFA.
- How long do short sales take?
This is probably the most common of the short sale frequently asked questions. Short sales require great deal of patience. It can take weeks, maybe even months. And it’s important you work with a realtor who has completed many deals and knows the bank’s requirements. Also, you should be ready to present any required document on time.