In this day of real estate market crashes and you owe more than what your home is valued at, you might qualify for a legal, lender approved solution known as a Short Sale. This can be accomplished by negotiating with your lender to accept a sale of your property to a third party for less than the current balance of your mortgage.
The Short Sale transaction, in today’s soft real estate market, is a viable and sometimes necessary option. It is a legal way of moving outside an “upside down” situation. It is much better than foreclosure or bankruptcy, as typically the credit is preserved or minimally damaged. Lenders are becoming more motivated to accept short sales for a number of good reasons. It can be a “win-win” for all parties…even the lender.
You as the homeowner “win” by getting out of a financial predicament via a clean transaction and a salvaged credit score. Allowing the property to go to foreclosure will typically damage your credit for up to seven years.
The lender “wins” by avoiding timely and costly foreclosure proceedings which could lead to an even more costly expense of being owned by the bank.
The buyer “wins” by purchasing a property at good market value…one that typically has not gotten trashed at this point. Often times, short sale properties are in very good condition, with minimal damage…a “win-win” for all parties!
But with every “silver lining”, there is a dark side…a down side…stay tuned…