4 REASONS NOT TO WAIT FOR A FORECLOSURE, CONSIDER A SHORT SALE INSTEAD
Nov. 10, 2020
Primarily due to COVID, mortgage defaults are very high. As of this article being written, certain federal government loans and many lenders have a moratorium on foreclosure. If you are in default on your mortgage payments, there may be an early strategic exit to a situation that will likely end worse if you wait. What we are discussing is a short sale. Are you deciding whether to wait for a foreclosure or sell your house via a short sale? Making these sorts of major financial decisions can be a major headache.
But, with the right information, you won't have to struggle with the choice. We have the information you need to make a decision today.
1. A Short Sale Can Protect Your Credit
The credit reporting agencies have check boxes for certain events, foreclosure being one of the checkboxes. However, short sales are generally reported to the credit bureaus as a debt settled for less than the full debt owed. The short sale negative credit reporting is less of a hit to your credit than a foreclosure. Further, you would have fewer months of missed payments prior to the full settlement.
So, it doesn't mean that a short sale won't have a negative impact on your credit score, it will, but there are more avenues for protection than there are when you're facing a foreclosure.
Foreclosures in and of themselves will damage your credit more than a short sale, which is important to keep in mind when you're deciding between the two.
2. A Short Sale Can Save You Money
In Missouri, after a foreclosure, the bank may sue for a deficiency judgment (a deficiency is the difference between what you owe and what the house sold for at the foreclosure auction). You could end up with a foreclosure, and a money damages judgment the lender could use to garnish or levy your other assets. In a short sale, the deficiency is negotiated as part of the short sale and often ends with the deficiency being forgiven.
3. Short Sales Can Benefit The Housing Market and Economy
Short sales add more to the housing market than foreclosures do, and they can also stimulate the economy by adding more opportunities to the market for jobs. Further, they generally sell for a higher price than a foreclosed home does in the REO sale.
4. Short Sales Give You Control
In Missouri, the foreclosure process can be less than 30 days. If you have an open file for a short sale, the lender usually does not start the foreclosure process – although they can.
You'll be able to be more actively involved in the process during a short sale procedure than you would be in a foreclosure proceeding, so you have some control over key dates – like when you would need to move. Short sales do tend to take longer than foreclosures, but that means there will be more time to ask questions and make sure all of the steps are being properly completed.
A short sale is also a good way to avoid potential pitfalls such as scams and investors looking to take advantage of you since you'll have legal representation through the process. Your legal representation will be able to steer you away from any potential issues,
Don't Wait for a Foreclosure, Sell Your House on a Short Sale
You shouldn't wait for a foreclosure when selling your home. A short sale can be a much better and cleaner exit strategy that allows you to take control of your life.
It's also important to begin the short sale process before foreclosure moratoriums end, the banks will have less short sale files they are working with, and their bad debt sales will be lower, so the lender is more willing to accept a purchase offer.
We are built uniquely to help in this process having in house Realtors and attorneys. If you need assistance during a short sale or foreclosure, make sure that you contact us today for the help that you need.