A short sale is the only sensible way out to salvage your credit and avoid a foreclosure. To the uninitiated, a short sale occurs when homeowners sell their property for an amount that’s less than the mortgage they owe. The proceeds of the property go entirely to the lender who then either, forgives the remaining debt, or obtains a judgement requiring the homeowner to pay the deficiency. If you are planning a short sale, here are some tips to help you:
Find agents specialising in short sales:
It’s worth the money to spend on a competent agent specialising in short sales. They’re experts at selling distressed properties and the best people to guide you about the process. But try not to look for agents beyond your neighbouring area. Also, look for experienced agents. Some realtors claim to be specialists in distressed sales after a short sales class. But it takes a lot of experience in closing short sales to be claiming expertise in the area.
Understand the consequences of a short sale:
Short sales are popular in the US, but lenders in the UK are not quite enthusiastic about the proposition. A short sale isn’t illegal per se, but homeowners will have to obtain consent from the lender. Also, the borrower has to arrange for the repayment of the shortfall. This could be done as an unsecured liability or as a full and final settlement. In most cases, owners make a short sale when they’re trapped in negative equity and are planning to move into a rental accommodation and obtain housing allowance to cover costs.
Look for ways other than the short sales:
Do not assume that the lender will automatically agree to waive off the remainder. You can negotiate with the lender to waive off a substantial portion of the deficiency, provided you pay a lump sum or sign a promissory note for the balance. And if you aren’t good at negotiating, try selling your house to the many cash for home companies that offer to buy your house for cash. They’re expert negotiators and can help you carve a substantial deal with the lender.
Consult a lawyer:
It is important for you to understand the legal complications of a short sale. While the real estate agent can help you fetch a good price for your house, a competent lawyer can ensure that you are discharged from all obligations of the sale.
