Can You Short Sale While in Foreclosure

 

The real estate market can be very fruitful; however, if you make a mistake, then it can be very costly to you. The case with Foreclosure is similar. If you fail to pay your mortgage payment, your lender may take control over the house to recover the financial losses, and in return, you will get nothing.

Homeowners experiencing Foreclosure often wish to go for a short sale of their properties before they are finally foreclosed. Short selling arises when assets are sold for less than the debts that the owner owes on the property. Short sales are an efficient way of preventing Foreclosure, but time is important when it comes to a short sale as the risk of Foreclosure or depreciation on such homes is always a lot. If you decide to sell your home on a short sale, your lender may terminate an upcoming foreclosure sale.

If you are someone juggling between short sale and Foreclosure, read below to learn how you can tackle this situation:

Short sale vs. Foreclosure

When a Homeowner is in a tough financial position, they can find themselves contemplating between short selling and Foreclosure as their final choice. Since these two words are comparable, it’s quick to see how they would get confused with each other.

In the case of a foreclosure, a mortgage lender (usually a bank) may take over the house if the owner fails to pay their mortgage payments. It is a complicated legal process that ends in substantial harm to the homeowner’s credit. Once the land is bank-owned, the individual must leave the house. From there, the bank would seek to sell the home to regain its financial losses.

With a short sale, the owner of the house retains complete control over the sales process and can remain at home through this period. They are entirely responsible for contacting real estate brokers and buyers. A short sale would also have a major negative effect on the credit record of the owner, although the extent would depend on their unique credit background.

Short Sale Race

Mortgage lenders who authorize homeowners to short sale their homes can often pursue Foreclosure at the same time. In other terms, you may be short selling your house when the lender’s mortgage team is attempting to foreclose the loan. In reality, it may be a battle between the short-selling of your home and the Foreclosure by your lender. The average loan foreclosure expenses in 2008 were $50,000. However, if your lender is likely to suffer less from your short-selling than from Foreclosure, they won’t go for Foreclosure and will authorize you to sell. 

Selling During Preforeclosure

A preforeclosure is a duration between the mortgage loan default and the final foreclosure sale. Pre-closure maybe for only 111 days in countries that require non-judicial Foreclosure or lender-driven Foreclosure without the courts. If you have managed to short sell your home during the preforeclosure date, prompt contact with the related department of your lender will be critical. Usually, short sales are made by the loss mitigation departments of lenders, whereas the foreclosure departments of lenders do foreclosures.

Staving off Foreclosure

Short-sale homebuyers should convince the seller’s lender that their purchases are superior to Foreclosure. The buyer will request a very timely purchase proposal to delay the sale of your home foreclosure. Usually, a comprehensive purchase offer involves a realtor market analysis of the property and an estimation of the net sales profits of the lender. With the buyer’s short sale purchase deal in hand, you can ask the lender to terminate the foreclosure sale if possible.

Canceling Foreclosure Sales

Mortgage lenders usually cancel the planned foreclosure sales for many reasons, such as the sale of their preclosure properties. Nevertheless, the closer your house is to a foreclosure contract, the more challenging it will be to cancel the deal. Expenses can be another reason why your lender might put off a foreclosure sale. You or your buyer can agree to reimburse any foreclosure cancelation costs when your lender reviews your short sale purchase offer.

Real Estate Brokers

Professional real estate agents may best handle short selling of homes than by ordinary home sellers. Using a short-sale real estate agent might help you keep a home on a short-sale market and off a foreclosure list. In short sales, lenders often pay for the fees to real estate agents and the seller’s closing costs. A competent real estate broker negotiating a short sale can be able to persuade the lender to postpone or cancel a foreclosure sale.

Up in the air

When it comes to buying and selling short sale real estate, the result is fairly uncertain. If all goes well, it’s a win-win for the buyer, seller, and lender. It is obvious, though, that that is not always the case. Remember, if the offer sounds too good to be true, it is probably – especially concerning real estate.

We know it is very stressful to deal with a foreclosure or short sale, especially when you have invested so much in the house. However, you will have to make a choice. A foreclosure will result in a total loss of the house and may damage your credit score brutally. On the other hand, short sales will provide you some leverage, and you will be able to deal with these stressful circumstances better.

Make a wise decision at the right time for a better tomorrow.