Short sales and foreclosures might sound like good deals for home buyers, but they can be nightmares for homeowners. Here’s how the process actually works.
Today I’m talking about the difference between a short sale and a foreclosure. Most people believe that these types of properties are good deals and pretty straightforward, but we’re going to debunk that myth.
First, let’s look at the differences between a short sale and a foreclosure. A short sale typically happens when a homeowner owes more on a home than it’s worth and they have a window of time to sell it before the bank seizes the property. During the short sale process, the homeowner can remedy their debt and get caught up to make sure they don’t go into the foreclosure process.
For a valid short sale, there will need to be a significant distress in your life. For example, a spouse passing away, a job loss, or a medical issue. You have to prove that something caused you to be unable to make your payments. If you can prove that you have a hardship and that you’re in distress, you should be able to initiate the short sale process. The bank will then “short” the loan and take a loss on it to get it off the books. Then the seller can initiate the process of selling their home. It’s a tough spot for a seller to be in, but it does open up good opportunities for home buyers who are looking for a deal.
If you know someone who is going through a short sale, we can help them out.
I’d be happy to refer you to a short sale expert if you need one.
A short sale is not an easy process. You have to jump through the hoops that the bank will provide. Negotiations and paperwork can be frustrating. However, the short sale will have much less of an impact on your credit than a foreclosure.
Foreclosures are much tougher for homeowners. They will ruin your credit. With a foreclosure, the seller is no longer involved. The bank is the party that initiates this sale. As soon as house payments stop, the home becomes a liability for them, and they’ll take a bit of a loss to dump that property. Legal fees can get pricey during this process for the bank.
I really hope this helped shed some light on the differences between a short sale and a foreclosure. If you have any other questions, don’t hesitate to give us a call or send us an email. I look forward to hearing from you soon.