If you are having difficulty keeping up with your mortgage payments, you might be at risk of losing your home through foreclosure. Of the different ways to avoid foreclosure, selling your home with a short sale is often one of the top choices. Here is more information about short sales and how they work.
How Short Sales Work
With a short sale, you are selling your home for less than what you owe the bank. So if you still owe $250,000 to the bank for your mortgage, but a buyer agrees to pay $245,000, you get permission from the bank to sell the home for this amount. You must have permission from the bank before agreeing to the sale, or it can fall through. Not all financial institutions agree to a short sale.
The way it works is you put your house up for sale, and mention that it will be a short sale if you don't think you can get the amount you still owe on the house based on your mortgage. When you get an offer, contact your bank and let them know how much the buyer has agreed to purchase it for. They will then tell you what to do next. You may still owe the remaining amount, but you will no longer have the risk of a foreclosure on your record.
The Benefits and Drawbacks of a Short Sale
You obviously benefit by not having the home foreclosed, but you also benefit in other ways. First of all, you can sell the home faster. You might not get the home sold for the amount you owe, which could delay the sale and cause the bank to continue with the foreclosure. However, if you lower the cost and have a short sale approved, you have a better chance at finding a buyer. You may also have the chance at avoiding any legal risks, since some places don't allow lawsuits for deficiencies from a short sale.
The downside is that you not only need the buyer to agree to the short sale, but have the bank agree to it as well. You might go through multiple attempts before the bank approves what a buyer is willing to pay for the home.
Getting a Short Sale With Multiple Mortgages
There is a little more difficulty when you want to go with a short sale for a second or third mortgage on your home. You likely got these other mortgage due to financial difficulty, but now that you are facing foreclosure or bankruptcy, it becomes more complicated. You can still get a short sale, but it needs to be approved by all lenders for all mortgages, as opposed to just the main lender. It can take more time getting a buyer's offer approved by each lender, so keep that in mind. Employing a professional real-estate attorney, like Iannello Anderson, can help you navigate this process more easily.