This is a
question that is asked many times of real estate agents by homeowners with
serious financial difficulties. It’s not an easy decision to make but when time
is not on your side, you may not have a choice. If you are in a situation where
you simply cannot pay the mortgage than waiting may be the worst thing you can
possibly do.
Let’s say
that your home is currently up for sale and you haven’t had a single showing.
If the interest is not there on the part of home buyers than the fact that your
home is actively listed is not helping you at all. Time is ticking and if
you’re already behind on your payments. The bank is already aware of your
situation and I can guarantee you that if you don’t do something they will have
no choice but to begin foreclosure proceedings. As bad as a short sale might
seem to you, it is a better alternative than a foreclosure.
It’s
important to remember that with an approved short sale the bank is willing to
accept the sale price and will not
expect you to pay the difference between the actual sale price and what is
currently owed on the home. If your lender approves a short sale price of
$150,000 even though you currently owe $200,000, you won’t owe them the $50,000
difference. This may not be the case in a foreclosure. Losing your home is bad enough;
do you also want to owe money even though you’re no longer living there?
A short
sale is a complicated process and takes time. One of the advantages is that if
you have applied for short sale approval you won’t keep getting collection
calls from the lender. Once they are aware of your application you can breathe
easier; at least for a little while. Approval normally takes between 2 – 6
months, maybe more. This can also provide you with the time you need to start
working on “plan B”. Let’s face it;
unless something changes you will be looking for a new place to live regardless
of how your home is sold; foreclosure, short sale or the traditional route.
There is
one thing that you must remember if you decide that a short sale is the right
decision for you. You are asking the bank to “forgive” a large amount of debt
that you owe them. It is in essence a “gift” and the bank is fully aware that
they are losing a substantial amount of future revenue if they approve you. Be
patient and most of all; be prepared to “prove” beyond any doubt that you are
experiencing extreme
financial duress.
Offers
made by interested buyers may be (and often are) less than the bank is willing
to accept. At this point you are no longer the one making the decision, the
bank is. But at least you now know the minimum amount that your home can be
sold for and you are doing all that you can to make the best out of a bad
situation.
So, is a
short sale the best solution for you? I can’t answer that question here but you
should talk to your lender, your real estate agent or an attorney to decide
what the best decision is for you at this very difficult time in your life. One
thing is certain; doing nothing is the worst decision that you can possibly
make and one that you will have to deal with for many years to come.
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