Why a Short Sale Can be a Win for Everyone Involved

I have a past client’s home that I have had listed for over a year. It is a wonderful townhome in a great neighborhood, but because of the economy the home’s value has been declining. She now owns more on her house than it’s worth. Needless to say the only where to go from here was to a short sale.

On top of the drop in value, my client had to change jobs. Her new job was paying her less than her old job. The reduction in pay coupled with the drop in value of the home put her in a no-win situation. She could not refinance and did qualify for retooling her loan for a lower payment. She was living off credit cards and going through her savings and IRA’s – something had to give.

I suggested to her to do what is called a short sale; this is when you agree to sell the house for a lesser price than what’s owed to the lender. It requires that you put together a package of required documents for review by the mortgage company to prove that you have a true hardship situation and there is a valid reason you can’t repay the loan.

With a Short Sale, the seller can get a FHA loan in two years with continued good credit which differs from a foreclosure where you cannot get a loan for up to 10 years. The banker gets the home sold and off their books with out the costly foreclosure process. The new buyer gets a great deal and the home is owned by a new family. This makes it a good outcome for all parties involved even though it is a bad situation.

If you or someone you know is in the situation of owing more on their home than it is worth, tell them to get in touch. I can advise them if this is the best move for them to make.

-Sharon J. Coleman

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