Pros & Cons of a Short Sale
REASONS A SHORT SALE MIGHT BE BEST FOR YOU
- Gets you out from under a debt that you can't afford with no future recourse.
- Better for your credit than foreclosure and allows you to re-enter the market in 2 years, rather than 5-7 years after a foreclosure.
- No fees or cost to you. (The lender pays closing costs & commissions.)
- May allow you to stay in your home longer, choose your move-out date & meet the new owners.
- Your loan modification was denied, you didn't receive principal reduction or you have been waiting months for feedback.
- Liens, judgments or deficiency amounts can be negotiated while in escrow...including IRS and franchise tax liens. (Consult your attorney and/or accountant.)
- You already damaged your credit because your loan modification company or bank told you that you had to stop paying before getting loan modification assistance - now you have poor credit anyway.
- No "F" word (foreclosure), and no "Notice of Public Sale" on your door.
- Get a WORKOUT versus a KICKOUT and leave with dignity.
DRAWBACKS TO A SHORT SALE
- Waiting for the bank to respond to an offer can be frustrating, although new federal regulations activated 4/5/2010 should speed things up dramatically!
- The bank will want to examine personal records such as tax returns, bank accounts, assets and liabilities, in addition to asking for a hardship letter from you.
- You will need to allow buyers to view your home for a week or two.
- There is no assurance the bank will accept a short sale offer.
- The derogatory credit will remain on your credit report for 7 years.
For many sellers, though, the chance to buy another home in two years is the real motivation to do a short sale. Good credit behavior can supplant bad credit after two years, even though the derogatory will remain.
Contact Vicki Stanton, 714-809-5787 or email.