Avoiding Mistakes during a Short Sale
While a short sale is certainly something no homeowner ever hopes to
have to face, it is becoming more and more of a reality for many people
today. If you have found yourself in a situation where you are forced to
consider a short sale as a solution to your current mortgage problem, it
is certainly important to make certain that you avoid any possible
mistakes. The short sale process can be fraught with possible pitfalls,
particularly if you are inexperienced in this area.
First, always make sure that you have someone available to help you who
is experienced with short sales such as a real estate agent, attorney or
even a consultant who specializes in short sales. It is imperative that
you ensure you do not inadvertently fall into a mistake while handling a
short sale that could ultimately cause you even more problems.
In addition, if you are considering a short sale on your home, always
make sure that you speak with your lender about this possibility first.
Many homeowners make the mistake of believing they will be able to
negotiate a short sale without talking to the bank. While it is possible
that you could put the house on the market and find a buyer, the bank
must agree to this in order for the process to be finalized. If the bank
will not agree to sign off on the deal, you cannot complete a short
sale. Instead, the lender will usually just foreclose on the property,
therefore it is crucial that you speak to the lender first and obtain
approval for a short sale before you proceed any further. Ideally, it is
always best if you obtain approval for the short sale in writing so that
you will have something to reference later if there should be any
question about it.
You also need to make sure that you understand all of the possible
ramifications to going ahead with a short sale. A short sale can be
advantageous in many situations, but you could also find yourself being
responsible for owning taxes on the difference between the sales price
and the amount owed to the bank. The bank may also insist that you pay
the difference between the amount you owe them and the sales price, even
if they agree to the short sale. You should also not assume that just
because you are able to avoid foreclosure that your credit record will
be spared an impact. A short sale can still negatively impact your
credit record and reduce your credit score even though it might not be
as severe as would be the case with a foreclosure.
These can be very serious repercussions so before you decide to list the
property for sale as a short sale it is always a good idea to consult a
CPA and/or an attorney. You will need to make sure that you fully
understand all of the possible outcomes related to selling your property
through a short sale.
Furthermore, you should make sure that you take full advantage of a
short sale if you have the opportunity to use it as a possible solution
to your mortgage problem. In terms of your credit a short sale is not
the most ideal solution, but it can be better than a foreclosure or
bankruptcy in many situations. Once you receive approval for the short
sale from the bank, make sure that you immediately begin to promote and
advertise the property. You should also be sure that you are working
with an experienced real estate agent, preferably one who has handled
short sales in the past. Utilize every method possible for advertising
your property, including the Internet, flyers, classified
advertisements, open houses, etc. Also make your home easily available
for showings and consider allowing a lock box to be placed on the door
to facilitate showings for agents, even if you are not at home. In most
instances a short sale will attract interest from buyers because they
know they may be able to purchase the home for less than they would
typically pay for a comparable home.
A short sale can be a good solution for many homeowners who find
themselves in an undesirable situation, but only if you take the time to
understand all of the possible repercussions and you ensure that you
have taken necessary precautions to avoid some of the more common
mistakes that are often encountered when handling a short sale.