In the last few years, short sales have become increasingly common, especially since the real estate bubble caused numerous potential foreclosures that banks wanted to avoid altogether.
Although the short sale can be both frustrating and long endeavor, the result is win for all involved parties. Therefore, the seller will no longer be in debt, while the buyer will get the property at a bargain, and the bank will get back the invested funds.
You should check out Florida Homeowner Solutions, which will provide you with the relevant information about different options you can find online. It does not matter whether you wish to buy or sell because you should understand a few things about them before making up your mind. Let’s start from the beginning.
Differences Between Foreclosure and Short Sale
You should remember that foreclosure is not the same thing as a short sale. During a foreclosure, the household owner is not involved, while they require a homeowner to be active too. The facts state that household owners who wish to enter a point of a short sale are trying to avoid it by striking a deal with the bank.
When you purchase a home, in some situations, you must evict the previous owners, which may cause a legal problem. Generally, a short sale will not affect your credit score the same way as a foreclosure, which is why you should do it before the due.
Of course, it will cause a black mark, but it will not damage it in the long run. It means you can take another loan two years afterward, while foreclosure will remain in your report for the next ten years, making you a bad client for future loans.
You should be as patient as possible and prepared for each step along the way. Remember that short sales can require months to close. Although the name suggests otherwise, you should know it is not a time indication but the idea that the seller is coming up short of paying the mortgage. You should click here to learn everything about foreclosure.
The bank will not come out and tell you how much they will accept for the household, while both buyer and seller will negotiate everything. Afterward, the seller must get the price to the lending institution for approval. The process may take a long while, especially if they reject the first offer, which may prolong the process.
If your goal is to avoid the end game by taking advantage of this particular option, you must meet certain requirements to be eligible:
- You must prove the financial hardship in the form of having significant medical bills, getting divorced, or being laid off. The bank will require additional documents to prove you are in a bad financial position.
- You must owe more than your home’s worth, meaning you will be upside down in the mortgage due to negative equity.
- You should prove that you cannot afford monthly installments because the adjustable rate has readjusted your overall expenses, for instance.
- If you are not eligible for modification, then you can take advantage of a short sale.
Generally, the lending institution will require proof in writing that you meet all the criteria mentioned above. Getting approval is also a long process.
Find an Agent
Another important consideration is finding a real estate agent with experience in short sales, which will help you create a significant difference, especially if you wish to sell a home to get away from significant debt.
Since the process requires significant paperwork, you should find an agent who is completely familiar with the steps you must take to make the process simpler and seamless. These days, banks are receiving a high number of requests compared with the past moments, meaning organized paperwork will get responses faster than others.
The essential aspect element is the time when choosing this option. If you do not find a buyer in a timely manner, you may end up in foreclosure, which may affect your present and future altogether.
If you are a buyer, getting a home under a short sale can be a perfect solution to save money eventually. However, you should proceed with the process with caution. Only a quarter of short sales tend to close, while the lending institutions are the reason for it. Therefore, numerous buyers become frustrated when they walk away from short sales.
Check out this guide: https://www.wikihow.com/Find-Out-If-a-Home-Is-In-Foreclosure to learn how to determine whether a particular home is undergoing foreclosure.
At the same time, multiple foreclosures are occurring in the market, making it difficult to complete the entire process smoothly. Although banks are attempting to streamline the process, having a plan B is always advisable.