Yes you heard me right. I think you are crazy to list your home as a short sale. The only reason I believe to list your home as a short sale is if your bank releases you from any liability of the shortage or if you morally don't believe in foreclosure.
I hate to say it but the only people that really make out are the banks and the real estate agent. Yes you heard me right again. It benefits a real estate agent to short sell your home. But some agents don't explain everything to you. IF YOU DO A SHORT SALE YOU COULD BE LIABLE FOR THE LOSS BETWEEN WHAT YOU OWE AND WHAT IT SELLS FOR. What are you crazy? Why would you open you and your family up to a long term debt on something you don't own. I'll say it again. ARE YOU CRAZY?
The reason you do a short sale or a foreclosure is because you can not afford the payment and you need to get back on financial track. You need relieve the stress, the inability to make the mortgage payment. You don't need to continue on a rocky path, cut your losses and move on to a firm financial future.
Some banks are even making you sign that you are liable for the shortage. If you don't get a letter from the bank releasing you from the liability of the shortage I wouldn't even do a short sale. And I would get that letter upfront before you start the process.
Here are my thought on the differences between short sales and foreclosures.
Yes you could owe the bank the difference of what you owe. Many agents gloss over this. You should have a signed letter from the bank saying that you won't owe for the deficient. Bank of America makes you sign that you are responsible for the loss.
|I have never heard of a bank coming after you. President Bush signed a bill exempting principal resident sellers from getting a 1099 for taxes.|
|EASE of DOING||
Horrible. Banks take their sweet time and do not communicate well at all. You never know what is going on. Your bank will want income documents, explanations and proof you can not pay.
|Very easy to do. Just don't pay the bill. No having to clean the house for showings. No jumping thru hoops to prove to some bank guy in some other state.|
|TIME NEEDED||Metro Detroit short sales can take from 2 months to 6 months to complete.||In Michigan when you don't pay your mortgage for three months you go into foreclosure. Then a sheriff sale is scheduled. Then you can live in the house for 6 months from the date of the sheriff sale. This could add up to a minimum of 9 months of free living for somebody that can't pay.|
|In a short sale you could owe and be responsible after the short sale loss.||You can live for up to 9 months free and maybe more. You should be able to save to get back on your feet and have deposit money for a rental apartment or home.|
|CREDIT ADVANTAGE||A bank won't let you do a short sale if you are not behind on the mortgage. So you have to have mortgage lates. The issue is how many mortgage lates and how many months behind are you. 90 days late is considered by credit reporting agencies as a foreclosure whether you are in a foreclosure or not. No bank will give you a loan for a new home for 3 years either.||If you pay the rest of your bills and maintain the rest of your credit you should be able to buy another home in as little as 3 years.|
So the bottom line is a short sale will make you more work, get you frustrated dealing with the bank, and you could owe money. Or you could live mortgage free longer with no hassle. And your credit will be no different and you can buy a home in the same amount of time whether it is a short sale or a foreclosure.
Ask any mortgage person. A 90 day late on your credit report will keep you from buying a home for a minimum of three years whether it was a short sale or a true foreclosure.
Feel free to search Metro Detroit real estate and Metro Detroit foreclosures and get the latest listings emailed to you.