Short Sales: What are They and How Do They Work?

If you are ‘underwater’ on your mortgage, meaning you owe more than it is worth, it can be a difficult situation to overcome. If you’re falling behind on your payments, and believe a foreclosure may be in your future, you do have some good options.

One of the solutions that works well for people is to seek a short sale. Simply explained, a short sale is when you sell your home to another party for less than what is owed, with permission from your mortgage company. This method helps the homeowner to retain a lot more control over when the home is sold, how much it is sold for, and what involvement they have.

In many ways, a short sale is similar to a traditional sale from the point of view of the buyer. Many buyers are actually attracted to short sale properties because they believe that they can get a great deal, so it can be easier to sell than would otherwise be possible.

Why Choose a Short Sale?

Compared with a foreclosure, a short sale offers some very good benefits for both the homeowner and the mortgage company. The following are some of the key advantages to be aware of when considering your options:

  • Avoid Foreclosure Costs – Going through a foreclosure can be very costly. By some estimates, homeowners pay as much as $7,500. With a short sale, the costs are largely the same as they would be for a traditional home sale.
  • Retain Value in the Home – Mortgage companies prefer short sales because they don’t drive the value of the home down like a foreclosure. This can help them minimize the losses, which is of the reasons they are typically willing to approve a short sale.
  • Better for Credit Report – A short sale can negatively impact your credit score, but not nearly to the extent that a foreclosure would. In terms of keeping your financial future strong, a short sale is very preferable.
  • Easier – While a short sale requires many additional steps and some extra paperwork compared to a traditional home sale, it is still far easier than going through a foreclosure.

Don’t Try a Short Sale On Your Own

Many people make the mistake of thinking that they can handle a short sale on their own. The fact is, this is quite a complex process, and often requires a lot of negotiating with the mortgage company, those interested in purchasing, and even any new lenders. Having an attorney there to represent your interests can help you to not only get your short sale approved, but ensure everything is completed correctly. Contact the Law Office of Ray Garcia to go over your options, and get this process started.