Short Sale To Avoid Foreclosure

The names change, but the problem remains the same. Some people call it the housing crisis while others have named it the mortgage crisis. Recession is mentioned as a possible result of the problem while confident money experts recommend patience until the dust settles.

Whatever it is called, there seems to be a vicious cycle spiraling down to disaster. Homeowners have given up, and some foreclosed homes are on the market at prices that would have been a great bargain five years ago. Individuals in dire straits cannot sell their homes and face foreclosure if they cannot unload the property in a market filled with homes that have been placed on the market by lenders that want to unload them. Unfortunately, other homeowners who might buy these bargains cannot sell their homes because it is suddenly difficult to get a mortgage. Homeowners also have trouble selling their homes unless they agree to bargain basement prices. Other homeowners find themselves living in homes that are not worth the mortgage that secures them.

Help is available for those caught in parts of the vicious cycle, and a short sale is a possibility for some homeowners looking to avoid disaster. Lenders are a diverse group so anyone looking for hardship assistance should immediately contact their lender to ask for help. A short sale might be a good option for the lender and the homeowner. The lenders have already foreclosed on many properties. Most of these companies do not want more foreclosures, and they do not really want to deal with selling the property.

In general, the basic process for a short sale works like this. The Lender agrees to accept the fair market value of the property rather than the amount owed on the loan as a settlement. The homeowner sells the property at the agreed price. The homeowner provides the proceeds to the lender as the settlement. The credit rating of the homeowner will not be affected by the short sale.

A short sale deal usually takes about sixty days from start to finish depending on the local market. The appraisal process often takes about two weeks to determine and agree on the fair market value. The approval of this amount by all the parties involved takes approximately two to five days. Closing escrow usually takes from two to four weeks and the deal is done.

The homeowner should avoid a negative impact on their credit rating by the short sale, but there may be tax implications. All homeowners should discuss the entire process and agreement with a Tax Professional before initiating short sale negotiations.