When you get to a point in life where you are considering the possibility of a Short Sale, you may be left with more questions than answers. With so many technical terms, it is easy to get lost in the verbiage and not fully understand what is being explained and offered to you. So what exactly does a Short Sale mean for you? There are multiple steps in the Short Sale Process including contacting Lien Holders, verifying any government programs that are applicable to your loan, negotiating and settling on terms of the sale, finding a real estate agent who is experienced in the Short Sale processes, discussing reduced payoffs with Junior Lien Holders if applicable and submitting a Short Sale offer.
With so many steps it is easy to get confused with the logistics of things and not fully understand what is being accomplished during your Short Sale experience. To simplify the process a little, you are submitting a request to sell the real estate on which your loan covers, to gain the approval from the Primary Lien Holder (your mortgage company) to accept a lesser amount than what is owed on your current loan. In order for a Short Sale to be successful, the Lien Holder (mortgage company) must agree and accept an amount lower than what is currently owed as well as an amount that is either the equivalent or lower that the properties current appraised value. The two main steps to keep in mind to have a successful Short Sale are as follows:
- Your Lien Holder must accept a lesser amount than what is currently owed on your loan
- Your Lien Holder must agree to accept an offer that is either at the current appraised value of your property or in some cases even below
Without these two steps, you cannot have a successful Short Sale and will need to research and consider other options.
One of the main questions that is asked regarding Short Sales, would be why the Lien Holders would be willing to participate in a Short Sale when that requires them to accept a lesser amount than what is owed by the loaners. The simplified answer to this question is for them to avoid the property going into the beginning stages of the Foreclosure Process.
If you are currently in a position where you are considering the possibility of a Short Sale, or are concerned that your property is going into the beginning stages of Foreclosure, don’t panic, you have options. While your credit will be hit in both instances, many view a Short Sale as a more responsible decision, as it is allowing the Lien Holder to gain back some of the investment that is being lost. Also keep in mind, you can begin to re-build your credit within only months following your Short Sale.
To learn more regarding your potential Short Sale or Foreclosure, or to find someone near you who can answer questions, click here.