No homeowner desires foreclosure, but in today’s uncertain economic climate, many people end up losing their homes. Foreclosure proceedings can be drawn-out, stressful, and a tremendous strain on a homeowner’s credit, assets, and savings.
Fortunately, an alternative exists for some people facing foreclosure. A short sale is a real estate transaction in which the bank lets a homeowner sell a property for less than what they still owe on it. They find an agent and put the house on the market, usually at a steep discount. If the property sells, the bank hopes to recoup the majority of the amount still owed, saving it the time and expense of a foreclosure suit.
Below are five reasons for consider short-selling a property instead of allowing the bank to foreclose on it.
Short-selling is less expensive. Completing a short sale does not normally leave a homeowner with out-of-pocket expenses, as properties are usually sold ‘as is’. The lender also pays the real estate commission and other costs associated with the sale.
There’s less credit damage. Short sales only have an impact of 80-100 points on a homeowner’s credit score, compared to 250-300 points with a foreclosure.
Financial recovery is quicker. After a short sale, a property owner can potentially acquire new financing with two years, whereas a foreclosure often makes it impossible to secure a loan for a much longer period of time.
Short sales provide a new start. After disposing of their property in a short sale, a homeowner can get on with their lives and find another place to call home. The Mortgage Forgiveness Debt Relief Act of 2007 may also apply to their situation and give them the opportunity to forgo paying taxes on the difference between their loan amount and the proceeds from the short sale.
The property owner does not have to immediately move. Short sales allow homeowners to stay in their home until the property is sold.
Although selling one’s home under involuntary circumstances is never easy, short sales are less stressful than foreclosure proceedings and allow the homeowner to recover much more quickly. If you’d like to learn more about the short sale process, let’s talk. Give us a call today to discuss your situation!
Law Office of Ray Garcia, P.A.
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