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What exactly is a Short Sale?

A short sale is when you sell your home for less than you owe. (Example: Your outstanding mortgage balance is 150k and you sell the home for 50k WITHOUT contributing the 100k difference.) Short sales happen BEFORE a home goes into foreclosure. With our company and investors, a regular purchase contract is drawn up to sell the house, just like when you first purchased it. Then the contract is passed off to a short sale negotiator that has worked has experience dealing with the different lenders/banks. Their job is to work with the bank, seller and facilitate the transactions. They take on much of the headache and do not get paid unless the transaction approves. If you are letting a home go for any reason by not making the payments, you are either going to short sale it, or it will be foreclosed on.

Some benefits of short selling a home are:

  • You still some leverage over the bank because you can help them avoid a foreclosure. You can use this to obtain a NON-Deficiency letter, or other favorable terms.
  • Its over faster, meaning you can get back on track faster
  • Avoid judgments and possible wage garnishments when you negotiation favorable terms.
  • You will spare yourself the social stigma of the "F" word, foreclosure.

If you know you are not going to pay off your mortgage loan in its entirety you will have to pick between foreclosing and short selling. Out of the 1000's of situations we have seen, its always smarter to do a short sale. As with most things, not facing the problem head on is the worst course of action. When compared to foreclosing, its a better option, but some drawbacks are:

  • Banks are slow, the process is taking 6 months on average but this is still much faster than foreclosing.
  • Your credit still gets dinged, just not as bad.