In the previous blog, we discussed what a short sale is and what is involved in the process. There are many times when the lender approves a short sale where it can be beneficial to the seller, the home buyer, and the lender. Even though it still can be a time-consuming process, the other option for a homeowner who owes more money on their house than it is worth on the market is a foreclosure. If you want to learn more about the benefits of a short sale, our real estate agents would love to talk with you.
Protects Your Credit
When a short sale is approved and the home is sold, the bank still has an option to sue the homeowner for the difference between the sale amount and the original loan amount. When doing this, however, the bank will need to get a real estate lawyer involved and the process will drag out and become more costly. If the lender decides to sue, a deficiency judgement will show on the homeowner’s credit report and will negatively impact their score. Typically, lenders will not sue and the reduced amount of money owed will not harm the homeowners credit.
Prevents a Foreclosure
Because foreclosures more often than not have a negative impact on the lender, the homeowner, and the market in general, lenders will commonly choose a short sale over a foreclosure. In the case of a foreclosure, it will make it quite difficult for the homeowner to be approved for a large loan in the future. Lenders will almost always lose money on a foreclosure due to time and money spent on the process, and the house itself stays on the market for a longer period of time. Because of this, a short sale is the preferred process because it will benefit all parties involved.
It Will Save You Money
Foreclosures are an incredibly lengthy process and can cost the homeowner thousands of dollars. When they are already in financial trouble, the costs of a foreclosure have a higher chance of bringing the homeowner to bankruptcy. In the case of a short sale, a buyer who is in a better financial state, could pay the some of the difference between what the current homeowner owes and what the property is worth. When there is a lower amount that the lender will lose in the sale, there is a also a greater chance the lender will not sue for the difference.
Short Sales Will Give the Homeowner More Control
Both processes are long and complicated, but a foreclosure is significantly more complicated, has many more steps, and will involve the lender’s legal team. Typically, a short sale process is similar to that of a regular real estate sale and allows the homeowner to participate in the deals between the lender, the buyer of the house, and the real estate agent. In a foreclosure, the homeowner is dependant on the lender’s attorneys.
Peace of Mind
Overall, a foreclosure has some incredible disadvantages to the homeowner, including a big hit to their credit score, a long and stressful legal process, and the stereotype that comes along with having to foreclose on a house. Even though short sales are still a stressful and potentially harmful process, there are many more beneficial opportunities for the homeowner. They will be able to get out of their mortgage in a shorter amount of time, they can avoid the legal process, and they will have a greater chance of improving their credit score in the future.
If you’re looking for a skilled short sale real estate agent, look to the realtors at Realty Resources. You can trust in our experience and we will guide you through each step along the way. Don’t get stuck in a foreclosure when you have a knowledgeable real estate agent on your side to negotiate the details.