Real Estate Short Sales

When a homeowner gets several months behind on house payments, there are only two or three options left. One is to go into bankruptcy or go into foreclosure. During a foreclosure the homeowner still looses their home, but sometimes have three to 12 months to leave the property. In some states it can take that long for foreclosures to go through.

A short sale occurs when the lender accepts whatever they can for the property. Most lenders don’t get what is left on the mortgage note. Short sales are not always agreed upon by the seller or by the lender. There are certain qualifications the owners must meet to qualify for a short sale.

The homeowner is usually still the one responsible for selling the house and then turns all proceeds over to the mortgage company. The real estate agents, closing companies, title company, etc., all get their profit from the loans. If the borrower has had a hardship, the mortgage company is usually more forgiving. Mortgage companies agree to short sales because if it goes into foreclosure, they loose more money. Unfortunately, almost 99 percent of the time, the bank will not write off the difference.

A foreclosure goes on ones credit report for at least seven years. Often sellers who once had a high credit score, after a short sale, it drops 200 points or more. It’s not as bad as a foreclosure.

When someone opts to purchase a house in a short sale, it can often take several months to get the sale done. Buyers will back out after waiting over three months for the deal to go through.