What is a Short Sale?
Technically speaking, it is when the proceeds of the sale are not enough to cover the amount of your outstanding loan balance. So, if you have a property which is for sale at $300,000 and you owe $350,000 on it, you have a shortfall of $50,000 plus whatever the transaction fees you might find. That would be a short sale. In fact, even if the home would sell for $350,000, the amount of loan with the extra transaction cost for the sale of the home, you would still have technically short sale.
Now practically speaking, if seller is willing to write a check and make up a difference and lender does not have to accept less than the amount of the loan. That property would be able to be marketed as a regular active property in multiple listings, because you are not requiring lender approval. If an owner is deeply underwater, let’s say, 25% or more on the their property , they really need to take a look at the finances and where they will find themselves in say 5-10-15 years, a long term view for them to come back to the value of the property and begin to build equity . Keep in mind during that entire time you are overpaying on housing. Essentially you are paying too much; you can rent for cheaper regardless of tax benefits. It’s still much less expensive to rent than purchase an overpriced property. You have to build equity and wait for appreciation to could just to come back to zero, before you are beginning to build any positive equity. And you want to compare that with what would that be like to actually just short selling your home and buying another property.
Now, we have a free financial calculator that would let you figure out basically when you will recover and return back to zero equity on your property. It will allow you to compare that to short selling your home, renting for couple of years and then re-entering the market place at that point of time itself and beginning to build equity right away. When you look at how they compare over the long run, you realize where you stand.
So, if you would like to have a copy of that calculator, you can send private message through you tube or you can visit our website at www.survivingtheamericandream.com and register and you will have it in few minutes. You find its empowering to know where you stand financially.