What is a short sale? You would think that by now almost everyone knows what a short sale is, but they don't and even people who think they know are still a little confused. It's no wonder that the subject isn't clear, the term short sale is confusing and in the few years short sales have existed the methods for a short sale have changed dramatically.
The most important thing you need to know about a short sale is that it's the best option when you may be headed toward foreclosure. Using a short sale to avoid foreclosure will save your credit ( yes it's still important, no matter how bad it looks now), and it will release you from future liability ( if its done right).
Read the article and learn, then contact me and let's get started on the road to recovery.
Try Googling What is a Short Sale, and you’ll get over 6 millions links to informative websites.
So it’s no wonder many homeowners are confused about Short Sales, what they are and what they have to offer. With so much information and misinformation floating around, it’s easy not to know which end is up, and no wonder.
From all the hoopla, you probably surmise a Short Sale is something good and also something complicated. To separate the wheat from the shaft, you want the simplest explanation possible. An explanation that will help you decide if a Short Sale is right for you.
Here’s the simple answer to the question, What is a short sale?
Here’s the long-winded definition:
The loss can —
- Be completely written off by the lender
- Partially or wholly paid off over time by the borrower through a promissory note – or –
- Partially mitigated through a lump-sum payment at the time of closing.
The lender may also seek the deficiency from the borrower post-sale.
The long and the short
For homeowners who can’t afford to live in their houses any longer — but can’t sell because they’re upside-down on their mortgage — a Short Sale could very well be the answer to a good night’s sleep. In fact, it may be the only viable way out of an impossible situation, stuck as they are between a rock and a hard place.
Doing a Short Sale is nothing more than putting your house up for sale in the usual manner, negotiating a solid contract with a qualified homebuyer, preparing extra paperwork, waiting a bit longer for your bank to approve the Short Sale, and moving on with your life.
It doesn’t really matter the state of your financial situation. If you need to get out from under an upside-down property, the chances are high you can do it with a Short Sale.
Being upside-down isn’t the same as being inside-out
Currently, 25% of homeowners are upside-down on their loans.
- Many of these homeowners have or will soon face adjustable interest rates that make it impossible to keep up with payments.
- Others are experiencing hardships, like job loss or illness.
- Some have to make a change due to job relocation or family reasons.
- Still others are in a negative cash flow position on rental properties.
- And others don’t see the point of making payments on a house that will never recover from the real estate bust.
Unless banks forgive a portion of those loans, however, homeowners are ‘under house arrest’ and cannot sell.
This is where homebuyers looking for a good deal come into the picture.
Because buyers must wait for bank approval, they’re only willing to purchase a Short Sale, provided it’s at a discounted price. Depending on the condition of the house, Short Sale properties generally sell for about 10% less than comparable ‘non-distressed’ houses.
This kind of discount makes your house that much more attractive to many homebuyers, who are usually investors and first-time homebuyers. Some buyers who currently own a home but want to move up are also willing to make the plunge, provided the right opportunity comes along.
You don’t have to get dizzy from being upside-down
Because your lender must take a loss on its original investment, it must decide whether approving your Short Sale is a sound financial decision. They do this by first examining your financial personal position and then making sure the contracted price is the best possible price given current market conditions.
Getting right-side up
When you decide to do a Short Sale, make sure to take 2 crucial steps.
- Treat the selling of your house with the same dedication and respect as you would a regular sale.
- Understand that a Short Sale isn’t guaranteed and requires flexibility, patience, and the willingness to make it work.
Take it to the bank
Done right, a Short Sale can be successful. And the emotional cost of doing one will be more than offset by being able to move out and move on.
For more information about doing a Short Sale, please visit Chicago Short Sales.
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JUDY CHAPMAN |What can I do for you?
Heart of North Shore & West of North Shore
Residential Sales ∙ Residential Rentals ∙ Short Sales
Koenig & Strey | 1925 Cherry Lane | Northbrook, IL 60062
Judy@JudyChapman.net | Office: (847) 521-4111
© 2007-2011 www.activerain.com/blogs/NorthShoreChicago by Judy Chapman. ALL RIGHTS RESERVED. Portions of this content may be used with attribution. The information contained in this blog is the author’s own opinion and does not reflect the opinions of Koenig & Strey Real Living.