What happens if I short sale?
In a short sale, the home sells for less than the seller owes, so the lender won’t get all their money back. As a result, the original lender must agree to the sale. The seller must prove they have no other option. Next, the seller needs to show some sort of hardship.
What is a lender initiated short sale?
A short sale is the sale of a real estate property for which the lender is willing to accept less than the amount still owed on the mortgage. The housing market must have gone down so much that the house is worth less than the remaining balance on the mortgage.
How does a short sale work in real estate?
A short sale process starts off like any other home sale: You contact a real estate agent (here’s how to find a real estate agent in your area), list your home (mentioning that it’s a “short sale/subject to lender”), then wait for an offer to come in. But once you accept an offer, things get tricky.
How long does it take to qualify for a short sale?
As a result, individuals who undergo it typically have to wait at least five years before they can qualify for a new home loan. Bottom line: Foreclosure is scary for good reason. People facing it will want to approach their lender and discuss their options—one of which might be to do a short sale instead.
Do you still owe money on a short sale?
If the amount the mortgage company receives from the sale is less than the mortgage debt owed, depending on state laws, the homeowner may have a deficiency judgment. In other words, the now-former homeowner may still owe money on the home loan. Foreclosures are less common than short sales.
Can a bank take ownership of a short sale?
“Some banks may even prefer to pursue a foreclosure, since they not only assume ownership of the property but may receive bailout money from the homeowner’s mortgage insurance policy,” says Marlene Waterhouse, a real estate agent and the owner of Short Sale Solutions.
What does short sale mean in real estate?
In real estate, a short sale is when a homeowner in financial distress sells their property for less than the amount due on the mortgage.
What happens when a seller accepts a short sale offer?
Short sale offer: Once a seller accepts an offer from a potential buyer, the listing agent sends the lender the listing agreement, an executed purchase offer, the buyer’s pre-approval letter, a copy of the earnest money check and the seller’s short sale package.
When is a short sale considered a deficiency?
The term “short sale” refers to the fact that the home is being sold for less than the balance remaining on the mortgage—for example, a person selling a home for $150,000 when there is still $175,000 remaining on the mortgage. In this example, the difference of $25,000, minus closing costs, and other costs of selling, is considered the deficiency.
How does a short sale affect your credit?
Any type of property sale that is denoted by a credit company as “not paid as agreed” is a ding on a credit score. Therefore, short sales, foreclosures and deeds-in-lieu of foreclosure all negatively impact a person’s credit. Short sales don’t always negate the remaining mortgage debt after a property is sold.