A short sale is a carefully agreed upon sale of a property where a lender is willing to accept less than the amount owed on it because the borrower, due to an acceptable hardship, is unable to make payments. The lender accepts an offer to purchase from a 3rd party buyer, thus relieving the original owner from encumbrances and potential, future liabilities. Why are home lenders willing to take less for the home than is owed on it? Because lenders will lose more if the property goes into foreclosure. It is EXTREMELY expensive for a lender to foreclose on a borrower. There are three stages in the foreclosure process. They are pre-foreclosure, foreclosure, and post-foreclosure. The pre-foreclosure stage is the only one where everyone can come out a winner. In the foreclosure stage, the homeowner's FICO credit score can be reduced by 250-300 points and it could take 7 or more years before a lender will offer a sensible interest rate to make it possible to buy another home. In addition, a foreclosure is a challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a foreclosed borrower is a police officer, in the military, in the CIA, or any other position that requires a security clearance in almost all cases clearance will be REVOKED and the foreclosed borrower will be terminated. In addition, many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment. Think "big box" companies--many will NOT hire someone that has a foreclosure on their credit history. In the pre-foreclosure stage, with the help of a REALTOR, trained to negotiate a "short sale" with the lender, the FICO credit score will only take a 80-100 point "hit", and the homeowner will be able to buy another home with a good rate in 18 months to 2 years or less. As a CDPE (Certified Distressed Property Expert), I can assist you the homeowner in making a decision that's right for you. The costs to the Lender for commissions, closing costs, basic repairs, property maintenance, insurance, taxes, home owner association dues, eviction and cort costs, attorney fees, and much more average about $400 a day for the average priced home. Over the 11+ months that the Lender has to carry the property, their hard costs could add up to over $130,000! When you subtract these costs from a reduced sale price due to market conditions, the Lender's loss is substantially greater than a quick short sale. To the lender, time is money! Sellers should not ignore the notice or telephone call that reminds them of their obligation. They should call their lender immediately so they won't accelerate the process of foreclosure. Many lenders are now suggesting to distressed sellers either a loan modification or a short sale. They have become more receptive to short sales. This could be a WIN-WIN for both you and your lender. Remember, the lender does NOT want to own your home!!!!! Call me, I can help you! I have successfully closed many many short sales. |