What is a short sale and how does it benefit you in Washington?

A short sale is a process in which the seller of a property sells the property for less than the amount owed on the mortgage. This can be a great way to avoid foreclosure if you’re struggling to make your mortgage payments.

What is a short sale on a home?

A short sale is a process in which the seller of a property sells the property for less than the amount owed on the mortgage. Short sales are typically used as a way to avoid foreclosure, as they offer homeowners a way to sell their homes for less than what they owe without having to go through the lengthy and often costly process of foreclosure. A short sale process begins when the homeowner contacts their lender and asks if they are interested in a short sale. If the lender agrees, the homeowner will then put their home on the market and wait for a buyer. A credit report will be pulled on the buyer, and if they are approved, the sale will go through. The process generally takes between 30 and 45 days. Credit rating agencies will typically lower the credit score of a homeowner who goes through a short sale, but it’s still often better than foreclosure, which can ruin your credit score for years.

Short sale basics | Housing | Finance & Capital Markets | Khan Academy

How buying a short sale home works

When a homeowner is considering a short sale, they will need to get in touch with their lender and let them know that they would like to sell their home. The lender will then work with the homeowner to find a potential buyer for the property. If a buyer is found and the sale goes through, the lender will forgive the difference between what the seller owes on the mortgage and what the property sells for. This is known as a deficiency judgment. A mortgage lender will not usually agree to a short sale if the seller still has money left on their mortgage.

How long does a short sale take?

The length of time it takes to complete a short sale can vary depending on the situation. Typically, the process will take anywhere from four to six months. However, if the homeowner is in default on their mortgage or there are other complications, the process could take longer. A mortgage servicer will generally not start the short sale process until the homeowner is at least 90 days delinquent on their mortgage. Mortgage payment history is a big factor that servicers look at when considering a short sale. Late or missed payments will make the process more difficult. A real estate broker can help you expedite the process by gathering all of the necessary documentation and submitting it to the lender.

How long does a short sale take?

Short sale vs. foreclosure

It’s important to note that a short sale is not the same as a foreclosure. With a short sale, the property is still technically owned by the homeowner. With a foreclosure, the property is sold by the lender after the homeowner has defaulted on their mortgage. A real estate agent can help you determine whether a short sale or foreclosure is the best option for you. Your bank statements, W2s, and credit report will be required to go through the process. Financial hardship is not required to do a short sale. Short sale transactions are reported to the credit bureaus, so they will be visible on your credit report. A foreclosure sale is not reported to the credit bureaus.

Pros and cons of short sale for seller

A short sale can be a great way for a seller to avoid foreclosure, but there are also some things to consider before deciding if a short sale is right for you. Short sale negotiations can be lengthy and complex, and there is no guarantee that the seller will receive approval from the lender. The credit score of the seller will likely take Some of the pros and cons of selling your home in a short sale include:

Pros:

– You can avoid foreclosure

– You can sell your home for less than what you owe on the mortgage

– You won’t have to pay for a real estate agent’s commission

Cons:

– Your credit score may be damaged

– You may still be responsible for the difference between what you owe on the mortgage and what the property sells for (known as a deficiency judgment)

Short sale vs. loan modification

A short sale is not the same as a loan modification. With a loan modification, the terms of your mortgage are changed in order to make them more affordable. This can include changing the interest rate, the length of the mortgage, or the amount of the monthly mortgage payments. A loan modification is a good option for homeowners who are struggling to make their current mortgage payments, but it’s important to note that a loan modification will not always prevent foreclosure.

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