The 7 Most Dangerous Short Sale Myths

 

Don’t let one of these myths land you and your family in foreclosure…

 

A short sale can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. Unfortunately, there are a number of myths about short sales and it is important to understand this process should you find it meets your current needs.

 

Myth #1 - The Bank Would Rather Foreclose than Bother with a Short Sale

This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure.

 

The qualifications for a short sale include:

 

1.      Financial Hardship – Here is a situation causing you to have trouble affording your mortgage, with no foreseeable solution.

2.      Monthly Income Shortfall – “You have more bills than income.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.

3.      Insolvency – The lender will want to see that you do not have significant savings that would allow you to pay down your mortgage

 

Myth #2 – You Must Be Behind on Your Mortgage to Negotiate a Short Sale

While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.

 

If you meet these requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left. 

 

Myth #3 – There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure

 

This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.

 

 

The foreclosing party – in most cases a lender – can stall a foreclosure up to the final day of the process. Today, many lenders will slow the foreclosure process with (have mb check this) that you are trying to sell your home, and almost all lenders will stall a foreclosure with a legitimate contract. Real estate professionals who understand foreclosures and short sales are able to market your home for sale and negotiate with your lender, until the foreclosure process is complete

 

Myth #4 – Listing My Home as a Short Sale is an Embarrassment

 

It is understandable to have reservations about letting the world know that you are in financial difficulties or owe more on your home than it is worth. However, according to recent estimates, more than one out of eight homeowners in the U.S. is in the same situation. You are to be congratulated for taking action, and finding a professional who can work with you toward a solution. You want to avoid foreclosure at all cost and the damage it does to your credit. With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.

 

Myth #5 – Short Sale are Impossible and Never Get Approved

 

This is a complete falsehood, Are short sales difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they Impossible? Absolutely not.

  

Agents with the Certified Distressed Property Expert (CDPE) Designation receive thousands of short sale approvals on a monthly basis. These professionals have undergone extensive training in methods to help homeowners in distress and process short sale. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.

 

Myth #6 – Banks are Waiting on a Bailout and Not Accepting Short Sales

 

You may have heard this, but the reality is that banks (and the

U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay them for losses. The government does not want a country full of vacant houses.

 

Today, more banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted a national training Webinar for real estate agents where the expressly stated the organizational goal of “eliminating distressed assets through modification or short sale.”

 

Myth #7 – Buyers are Not Interested in Short Sale Properties

 

This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales.

 

 

For buyers, short sales and foreclosures have become synonymous with “good deals.” Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property and seeing the transaction successfully result in a sale.