If you owe close to or more on your home than what it is worth in its current condition and at present market value, one alternative to foreclosure is to negotiate a short sale. A short sale occurs when a bank or other lending institution accepts less than full repayment of the mortgage amount. Short sales are possible because the bank realizes that if they go into foreclosure on the property, they will have to go through the expense of seizing the property, holding it on their books, and eventually reselling it, at which time they are only likely to receive between $0.50 and $0.80 on the dollar of the property's fair market value. Historically, banks have been very unpredictable when it comes to accepting short sales. Some will be quite willing to negotiate with a potential buyer and seller, others will refuse almost any offer, no matter how reasonable it appears. As the number of foreclosures mounts in the U.S. (and especially in the former "bubble" areas of rapid appreciation) we expect to see more and more banks and mortgage lenders looking favorably at short sale offers as a way to lower the inventory of foreclosed properties they are expecting to carry.
The best way to negotiate a short sale for your home is to use a real estate professional in your area. A Realtor will do two things: first, they will list your house below the current market value and will actively pursue buyers for your home at a discounted price, second, they will negotiate with the bank to approve your short sale and get it finalized. This is important because banks typically prefer working with Realtors as opposed to property owners and some lending institutions refuse outright to negotiate with the owners themselves without an intermediary agent. Realtors are also sometimes able to persuade the bank or lending institution to extend the time period before foreclosure in order to allow a short sale to go through. However, once you have determined that you want to attempt a short sale, you need to move quickly as it will take time for your Realtor to locate a buyer and negotiate the sale.
Foreclosure Help and Information: If you are considering a short sale, we can recommend a professional in your area that specializes in these types of transactions. Contact us at foreclosureandbankruptcy@gmail.com for a referral.
