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A Short Sale can occur when a seller owes more against the property than it is worth and, this is a key element, has to SELL the property. There are many reasons that a homeowner might need to sell a property including but not limited to:
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Job transfer out of the area.
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Divorce or separation.
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An inability to make the monthly mortgage payment because of a
payment increase due to the originally negotiated agreement.
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An inability to make the monthly mortgage payment because of the loss
of a job, a cut in work hours or overtime, or an illness or death in the family.
Short sales are more common when the value of real estate is not increasing, has declined or is decreasing. There are some options available to homeowners who are struggling to make mortgage payments and would like to try keep their property. See Help for Homeowners Who Cannot Make the Mortgage Payment. But if you MUST SELL under financial duress you may consider a short sale in lieu of foreclosure.
Are Short Sales Really “All the Rage”?
If you read the paper or listen to the radio you might believe that the nation is in the midst of a ‘foreclosure revolution.’ But in reality it is just a small, although growing, segment of the real estate market. Carefully explore your options if you believe that a Short Sale is in your future. Do this early, if foreclosure is less than 45 days away you may have waited too long.
Contact Mary or Bob NOW to find out what your options are.
Do you need to think about a Short Sale?
Contact a trusted real estate consultant, like Mary or Bob Willett to obtain a competitive market analysis on the property and a Seller’s Net Sheet. Make sure you are dealing with a Realtor® who is familiar with the process and will include all the actual costs of selling your property, for example owed back taxes or utility liens. This is NOT the time you want the best picture scenario, you need accurate information – good and ugly. This is really the only way for you to determine if you’ll need to Short Sale.
Will this process affect my credit?
There are really two questions and multiple answers here. The bottom line is yes, in some way, a short sale or deed in lieu of foreclosure will have an affect on your credit. With the widespread use of FICO scores and automated underwriting systems, scoring models are being revised to reflect the influence of short sales or deed in lieu of foreclosure. And although some real estate professionals are declaring that short sales are not as damaging to credit as foreclosures, it’s not a sure bet.
Remember two things (1) a short sale that leads to debt forgiveness is potentially a tax liability and that could result in further hardship at tax time, and (2) the resulting impact on your credit score could cause you to be unable to purchase another home or increase the costs of auto or other loans.
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