Don’t you just love Short Sales? Obtaining a short sale is a fortunate thing as there are many advantages to having a short sale on a home, and they do not have the same damaging effects as a foreclosure. You get the chance to work out a deal with a bank to sell a home you can no longer afford, rather than foreclose on that home. There is no eviction process and far less impact on credit scores, in comparison to a foreclosure. Here are some tips you should know about short sales, and how they can affect you:
How to Qualify for a Short Sale
To gain a short sale, you must owe more than your house is worth, and be able to prove financial hardship. This includes showing how you cannot afford your mortgage payments, and how you are not eligible for a loan modification.
Short Sales Can Be Frustrating
Even though banks work to streamline the short sale process, less than one-fourth of short sales actually close. This is because of the back and forth tennis game between the buyer, seller, and the bank. The bank is what really complicates the process, and can make it a long and arduous waiting period for the buyer. Try to be diplomatic and patient during the process, and transparent with the buyer. Short sales don’t really have anything to do with the time it takes to have one, as it can take 4-9 months to close on one.
Try Not to File for Bankruptcy
Filing for bankruptcy can actually hurt the process of a short sale, and can hurt your ability to complete one. Once you file for bankruptcy, creditors and banks can no longer collect on you. A short sale is considered a form of collection and is discordance with bankruptcy rules. You will need a legal expert to help guide you in this decision if you are considering bankruptcy.
Getting Lenders on Board
Try to get in touch with the main lender first, and make sure that you are on top of any other liens on the property. Be in constant communication with any other lenders, because these lenders are the ones who have to approve the short sale. Forgetting this task can slow down the process and lead to difficulty.
Beware of Deficiency Judgments
When managing a short sale, you will have to get the bank to agree to waive the right to come after you for the difference of a short sale, should the amount of the house sold be less than you how much you owed. This prevents the bank from suing you for the balance of the home, and will protect you from any other legal action concerning the amount.
Discovering how to benefit best from a short sale can be tricky, which is why it is important to use legal advice. To make better decisions contact us now for a trusted advisor. Our lawyers can help you with knowledge of the short sale process.