Benefits of a Short Sale

Reblogger Brian Sharkey
Real Estate Broker/Owner with SharkeyRE LLC CQ1040719

Thanks for sharing this very important information about short sales.  I have two customers this week that need this information and I'd like them to hear, read from others.  This is good advice and I thank you for sharing.

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Original content by Jan Keller

Homeowners unable to keep up their mortgage payments will face bank foreclosure--generally once the arrears reaches three months. The prospect of being foreclosed is not only emotional but has real-world implications. A foreclosure substantially impacts a homeowner's credit file for years. But there are ways of avoiding foreclosure. Among them are refinancing, loan modification and outright surrendering the home. However, there is another alternative to foreclosure and that is entering into a short sale agreement.


A short sale is simply an agreement between the borrower and mortgage lender which states the bank will not initiate a foreclosure and is willing to sell the house for less than the mortgage balance. For example, if a home is worth $100,000 but the homeowner owes $150,000, the bank will allow the home to be sold for $100,000 and forgive the difference of $50,000.


There are four principle benefits of entering a short sale agreement. Besides not being foreclosed, it allows the homeowner to remain in the house until it sells. This means the borrower lives mortgage free during the short sale period which can take three to six months or even an entire year. Below are more benefits of a short sale:

Short Sales Costs a Homeowner Nothing

Not only do the homeowners not pay a mortgage, they are not responsible to pay any of the costs associated with selling a home. This includes such expenses as attorney's fees, closing costs, real estate agent commission and property taxes. Title insurance is also paid by the lender.

Credit Damage is Limited

Unlike a foreclosure, a short sale limits the amount of damage done to a homeowner's credit file. Foreclosures impact credit history for several years. Short sales, however, only have a temporary impact on a borrower's credit history. In just a few years, a borrower's credit score will improve, in part because their debt to income ratio will be substantially lower. Moreover, a short sale allows time to build up savings in order to place a down payment on a new home.

Short Sales are Discrete

Foreclosures happen out in the public, for everyone to see. Neighbors will know if a home is being foreclosed. However, a short sale looks like a normal property for sale.


Since the homeowner doesn't have to pay a mortgage, once the home is sold, they can often find a place to rent for less than their mortgage.  


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Brian Sharkey

SharkeyRE - #SouthFloridaBroker
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