Around the country, families are turning to different forms of debt relief to keep their properties and avoid bankruptcy. In the second quarter of 2018, more than 188,000 people filed for foreclosure. There’s no denying that foreclosure is traumatic for everyone, not to mention the fact that it can lead to a bad credit score.
Fortunately, there are ways to escape foreclosures, such as deed in lieu or loan modifications. But a short sale could be your answer. It allows you to sell your home in your own time and then pass the proceedings on to your lender.
If you’ve been considering a short sale, it’s important to have a skilled bankruptcy attorney on side to help you through the complex process. That way, you’re assured that all the legal requirements are dealt with properly and your legal professional will fight to ensure that your rights are always protected.
If you’re struggling to keep up with mortgage payments and feeling overwhelmed by debt, it may be time to seriously consider a short sale.
What Exactly Is a Short Sale?
A short sale is a transaction that’s approved by your lender to release your mortgage, typically for less than what you owe on your property.
Essentially, it’s a bargain for buyers since the home is marketed significantly below your previous purchase price. However, the lender takes a loss.
A short sale can take several months longer to complete compared to a standard home purchase. In Florida, the average short sale takes three to six months.
It’s important to work with a real estate professional who has short sales experience.
The Short Sale Process
As we’ve established, a short sale applies when the amount owed on your home is greater than its current market value. But some creditors are happy enough to forgive this deficiency to at least receive some of the money they are owed.
This is how the short sale process works in Florida:
- You contact a real estate agent to determine the current market value of your home.
- You then determine how much you’ll need to spend to bring your home up to selling standard.
- Next, you determine how much a real estate broker will cost.
- The next step is to figure out how much you will gain by selling your house.
- Calculate how much you still owe on the property.
- Call your lender and let them know about the situation.
- Confirm the details of the property and then begin the sales process.
Most lending agencies have a dedicated person to help with short sales, so always ensure you’re dealing with the right people who can help you.
Also, go over the necessary procedures for your short sale with your lender. Each company has different requirements, and some may waiver the negative amount owed once the property sells.
The Benefits of a Short Sale
As a seller, a short sale can help you to avoid foreclosure and negative credit implications that come with it. In many cases, it also means the absolution of the money you owe to your lender that may be in excess of the proceeds from selling your home.
In other words, the amount owed on your loan is subtracted from the proceeds from the sale after expenses and the lender then forgives the shortage.
For buyers, a short sale provides the chance to purchase a house at or below market value. What’s more, short sales are often owner-occupied and properties tend to be in better condition compared to bank-owned houses.
For lenders, a short sale allows them to avoid the extra exorbitant costs associated with foreclosures.
Once a Short Sale Is Approved
If your short sale is approved, the sales process proceeds just the same as any other property sale, including home inspections and loan approvals. There may be times when the process needs you to be responsible for a percentage of the loan. However, this is much less likely to happen than if you were foreclosing.
A short sale is a complex process. If you are considering a short sale, you’re likely to have questions about the consequences for your credit and your ability to purchase a home in the future. We are here to help you through the entire process and answer your questions.
Call the property professionals at Principal Law Firm for all your short sale advice and legal requirements.
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