4 Myths You Should Know About Short Sales
Short Sales are often an unknown or somewhat misunderstood facet of mortgage relief that can regularly intimidate distressed homeowners. When sellers first hear of a short sale they are often told some things that are true and some things that are wildly false about the process of a short sale. In this article, we’re going to look at 4 myths that every distressed homeowner should know about short sales and how to avoid the pitfalls of false information about them. Let’s jump right in:
- Short Sales NEVER get approved by the bank
- A short sale is just as bad as a foreclosure
- You must be behind on payments to execute a short sale
- If the market is down, the bank won’t accept a short sale
Don’t believe these 5 myths about short sales and check out the rest of this article to see what the real truth about short sales is in today’s market…
1. Short Sales NEVER get approved by the bank
As stated in our article about saving your credit and future with a short sale, we outline that a bank ALWAYS has their bottom line in mind, but they also have rules and regulations that govern what they can do with insolvent homeowners. Generally, a foreclosure is a long-drawn-out process that can cost a bank more money than that of accepting a short sale.
In essence in a short sale, the homeowner and real estate agent do the work that the bank would in a foreclosure. It allows the homeowner and the real estate agent to work hard on creating a solution for mortgage relief, instead of the bank repossessing the home and undertaking the process of selling the home.
Banks are in it for their own best interest and oftentimes what’s in a bank’s best interest is a short sale. That’s why we have specialized in short sales for mortgage relief on behalf of our clients who are insolvent.
2. A Short Sale is just as bad a foreclosure
A short sale CAN impact your credit score and history, but when a homeowner is proactive in their pursuit of mortgage relief and solutions it can lead to much better outcomes for the homeowner and their credit situation. If you know you’re going to become insolvent, it’s best to proactively seek solutions like forbearance and short sales.
The first step in this process is to contact your lender and let them know about your hardships. The better you can document your hardships and articulate the reasons for it, the more willing a lender should be to offer solutions. If you wait until you’re missing payments, a short sale can and will still help you get mortgage relief. The most important part of getting relief is to be proactive and not shy away from the scary or unknown variables that deter so many homeowners from taking action and helping themselves and their family’s future.
3. You must be behind on your payments to execute a short sale
Unfortunately, too many homeowners wait until they are in pre-foreclosure to attempt a short sale. Like we said above, the most important thing to do as a distressed homeowner is to be proactive and document your financial situation and struggles. Running a bank or a lending service is a business, its goal is to be profitable and make money. If you wait until you’re behind on payments, you can still execute a short sale and most definitely should utilize our services.
Many homeowners only believe that they can apply for a short sale when they have missed payments, are in pre-foreclosure or foreclosure… this simply just isn’t true. The most important part is to document your financial hardship. If you can document this and foresee struggling to make payments and are unable to sell your home for the amount of principal owed on the mortgage, then it’s time to consider a short sale.
4. If the market is down, the bank won’t accept a short sale
A lot of times the reason why a homeowner becomes insolvent is because the market they bought their home in plummets and they are unable to recoup the amount needed through a normal real estate transaction. This is when the homeowner should consider a short sale.
Many homeowners believe that if the market is significantly reduced, the bank won’t accept a short sale. Think of it this way, if the option is a short sale or foreclosure, the bank won’t recoup the amount of money that’s owed on the mortgage either way. So why would they reject the offer of the homeowner doing the work of selling the house instead of being foreclosed on. As we said above, it’s costly and time consuming for a bank to foreclose on a house. They’re well aware of market prices and if you’re proactive about seeking help and willing to do the work with us to help with the short sale, they have every incentive to work with the homeowner in order to recoup money and avoid the hard work of foreclosing on a home.
In conclusion, it’s important to understand that it’s generally in a bank’s best interest to work with a distressed homeowner on a short sale instead of foreclosing on them. Bank’s are willing and sometimes obligated to work with homeowners that have the proper documentation of the hardship and who are diligent enough to ask in a timely manner. If you are in pre-foreclosure or foresee insolvency in your future, please contact us today for help with resolving your mortgage issues and help in the execution of a short sale on your property. We have a team of investors ready to submit an offer the day that the bank approves your short sale. Talk soon!
– The Mortgage Relief Team