Whether or not you’re in foreclosure, if you’re not able to pay off existing mortgages by selling your home, you might want to look at reasons for short sale selling. In the past, there were very few reasons for selling on a short sale, other than getting the real estate agent to earn a commission. The scene is different today.
Reasons Agents Advise Short Sales
You may have heard that short sales protect your credit. This is not completely true. If you don’t make timely payments, your credit will have a problem. Short sales can spoil your credit rating. Though this might not happen immediately, it’ll happen eventually, unless your lender has agreed not to report it. Banks can report short sales as delinquencies and derogatory records.
Reasons agents encourage sellers to consider short sales are:
- They receive payments from the proceeds of short sales
- They are not paid when a seller gives up his home to the lender by going through foreclosure
- If the home doesn’t eventually sell on a short sale, agents get free publicity and more business through signage, marketing, open houses, and online posting listings
Benefits of Foreclosure
Though the foreclosure process is often painful for sellers, some benefits are there:
- There are no more mortgage payments.
- Since the proceedings take a while, the home remains yours until they conclude.
- There are no strangers walking around your home.
- Sometimes, banks give cash for possession after the sale.
Drawbacks of Foreclosure
Every home has some memories attached to it, and losing them can be shattering. There are other drawbacks associated with foreclosures too:
- Your ownership rights are taken away.
- Instead of a homeowner, you become a renter.
- There might be a Notice of Public Sale put up on your door.
- There’s a fall in your credit and foreclosures remain on credit reports for 10 years.
- Under most circumstances, you will not qualify to buy a new home for the next 7 years.
Benefits of Short Sales
If you forget the heartache, there are a few benefits that you could derive from a short sale.
- Maintain dignity knowing you have sold your home
- No social stigma due to foreclosure
- You don’t have to make mortgage payments unless you choose to
- Meeting the new owners is possible
- Under specific circumstances, you can buy a new home within 2 years in place of 5-7 years.
- When your credit report doesn’t show a 60-day plus late pay, you might be eligible for purchasing another home right away.
Drawbacks of Short Sales
The drawbacks of a short sale are similar to those of a foreclosure, but may appear less intense.
- There is a tough waiting period until the bank responds to the offer
- Your lender will examine all personal records like bank accounts, tax returns, assets and liabilities, and also ask you to give a hardship letter.
- The bank might not accept your short sale offer.
- Derogatory credit remains for 7 years on your credit report.
It’s best for real estate agents to abstain from giving legal advice to clients who are facing foreclosure and assuring sellers that their credit rating won’t suffer.
Whether you sell your home via a short sale or foreclosure, you will definitely need to know the value of your home so that it can be priced accordingly. Find out worth of your home with a home value report from Neighborhood IQ. It’s absolutely free!