What is a "short sale" and what are its effects.

 In these trying times many  are confused about market terms and conditions. The majority of people are familiar with the emotion packed word, foreclosure. Foreclosure is simply speaking, when the bank takes the property for nonpayment of the mortgage. There are notices that must be placed in the newspaper and sometimes ugly evictions can occur. Of course, foreclosure negatively effects credit. Right now Fannie Mae will not entertain a mortgage for a prospective borrower until four years after a foreclosure has taken place. The person foreclosed upon must establish credit or maintain their other credit references, if they want to be eligible for a new mortgage in four years.

A "short sale" is different than a foreclosure in that there are no newspaper notices or auctions on the courthouse steps. In cases where the house is not worth what is owed on the property, the bank agrees to take less than is owed to satify the debt. This is benificial to the bank as well as to the borrower. If the borrower is current on the loan and the bank agrees to a short sale, there is less damage to the credit. In many cases, however, the borrowers are behind when they negotiate a short sale with the bank.
 

The advantages to the bank are that the house is not vacant (vandelism), and they do not have the expensive legal bills incurred in a foreclosure. The bank does not have the risk of the owners stripping the house or the pipes bursting etc. The homeowners benifit by a civalized solution that allows them to know exactly what is expected of them and when. The mortgage companies want to homeowners to remain in the house until settlement even if they are behind in their mortgage. Homeowners have the peace of mind of knowing they acted as responsibly as possible in a bad situation by helping the bank miminize their losses. Short Sales are a win/win in an otherwise bad situation. Even though both the parties are losing something.

If you are considering a short sale, make sure you hire an agent with experience negotiating with the banks and one that can guide you through the process. In the Charles County area (Waldorf, Laplata, Hughesville, Brandywine), in Prince George's County or Northern Virginia Team Davis can help. We will be happy to give a free no obligation consultation that will further explain the process and give you options. (301-870-1313, 301-233-0586)

• Rate this Post!

  Select Your Rating:

  • 5 Stars (Excellent!)
  • 4 Stars
  • 3 Stars
  • 2 Stars
  • 1 Stars (Poor)

• Share this Post

  Share With A Friend:

  Your Name Your Email

  Friend's Name Friend's Email

  Optional Message

  Send

• Print
• Social Bookmarking

  Add to Bookmarks: