5 Tips To Successfully Navigate A Short Sale Or Foreclosure

Dated: 06/23/2019

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The sense of accomplishment and gratification a new property owner feels after the close of escrow is hard to quantify. Most times the excitement is off the meter, due to the fact that, for many of us, homeownership represents progress.

Regardless of whether you’re a first-timer, or a seasoned homebuyer buying your third or fourth house, it can be just a really pleasant feeling.

As such, nobody ever goes through the home purchasing process expecting to be faced with the possibility of having the home repossessed by the bank someday. But it happens. A lot.

According to national statistics, there were more than 360,000 foreclosure filings across the U.S. in the first half of 2018 alone. Continuing that trend would place the total at nearly three quarters of a million in a twelve month span.

While loss of employment, reduction in household income, and unexpected medical emergencies are the three core contributors that lead to the inability of a homeowner to pay the mortgage, which in turn leads to the threat of foreclosure, there are many others.

As unfortunate as it can be when homeowners fall behind on mortgage payments and are staring at the possibility of losing their homes, Short Sales and Foreclosures are two scenarios which must be considered when faced with that degree of financial hardship.

The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner. Here’s a brief overview.

Short Sales

A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.

On the buyer side, short sales typically take three to four months to complete and many of the closing and repair costs are shifted from the seller to the lender.

Foreclosures

On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it. A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.

A foreclosure will severely damage a homeowner’s credit standing and will remain on the report for up to 7 years.

Here are 5 tips for homeowners to use to successfully navigate a short sale or foreclosure:

1. Cure the Cause of the Delinquency. Whatever the cause of the inability to make the payments is, must be fixed. Simply put, you must find a way to increase the household revenue to a level that will support the monthly expenses and beyond. If you need assistance, we can help.

2. Cure the Delinquency. Usually, most lenders will initiate foreclosure after three missed payments. The longer the delinquency period is extended by the missed payments, the more the amount required to cure the delinquency will become. If you need assistance, we can help.

3. Short Sale a Better Option than Foreclosure. If you’re unable to cure the cause of the delinquency, or cure the delinquency by bringing the loan current, within a limited amount of time designated by the lender, the property will eventually be scheduled for foreclosure. In that event, it would be more advantageous to consider a Short Sale instead of allowing the property to be foreclosed. However you must select the right professional to assist in this process; otherwise the lender will not approve your request. If you need assistance, we can help.

4. Don’t Abandon the Property. Most people have no desire to suffer the indignity of having their items placed on the street by the Sheriff. So I get why property owners leave once they feel as though they’ve run out of options. But abandoning the property is not looked upon favorably by the lender. There are options available which you may not be aware of. If you need assistance, we can help.

5. Salvage Your Credit. If the property has already foreclosed, you must immediately begin the process of lessening the effects of the foreclosure by re-establishing your credit profile. Doing so will put you in position to become a homeowner again sooner rather than later. If you need assistance, we can help.

We Buy And Sell Homes™ is a non-traditional real estate solutions brokerage offering assistance and resources which enhance every stage of the ownership experience nationwide.

We provide a wide range of options designed to place current and aspiring property owners in the best long term position possible.

Call us today at (855)205-5504 and find out how we can assist. You’ll be glad you did!

Blog author image

Jeff Horton

Jeff is a certified, licensed residential and commercial property buyer with nearly two decades of highly-specialized experience as an investment professional and broker. ​ ​ Over that period, J....

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