Posted: 11:36 a.m. Friday, Oct. 11, 2013
Foreclosure is easy. All you have to do is wait around in your home until the Final Judgment arrives and boots you out of the property. Short sales take a bit more work. You have to put your heart aside for a moment and really think through the money issues… so you can avoid foreclosure.
You do not need to be a lawyer or a real-estate broker in order to sell your property and come off ahead, but it helps to know some of the most important areas where homeowners have been gypped, and what you can do to avoid the same costly mistakes.
Completing a short sale is not as painful as foreclosure, and it is not as involved as bankruptcy, but the process can take as long as 9 months to complete in some cases. Along the way, it is important to continue to pay your homeowner association dues. Failure to pay can kill the deal even in the final days to closing. It is better to prepare for the worst-case scenario than run 80% of the race, only to fall over from exhaustion within inches of the finish line. Be sure to set aside the funds to make it through.
A part of those costs will be in payment for qualified professionals who can advise you properly. You can read all the Do-It-Yourself advice on the web, but if you do not have any financial or legal expertise, you probably need to consult with a qualified real-estate agent who has plenty of experience with short sales in your state.
To make the best decision, you might need other professional help. Financial planners, bankruptcy attorneys, and CPAs can all help steer you in the right direction and ultimately save you a lot of money.
The most important part of a short sale is the negotiation with the bank. You are asking your lender to forgive a portion of your debt in exchange for a more qualified borrower. The importance of the debt negotiation means you want a professional who has extensive experience with short sales.
Banks do not forgive debt easily, but many institutions have softened their approach to short sales in the last year. Now, short sales are roughly as common as foreclosures, which is a huge increase in share from 2009. The bank should waive your deficiency in fulfillment of your debt obligation. If you do not receive this signed document, the bank will be legally able to come after you for the part of your debt balance not covered by the short sale.