Foreclosure vs. Short Sale

A real estate short sale is when your mortgage lender agrees to release your mortgage for less than what you owe.

Especially for properties located in Palm Beach County banks have become much more lenient approving short sales to avoid foreclosure procedures. New and updated government programs like FHA Pre-foreclosure and Hafa Short Sale Programs support this as well as so called outreach programs available directly from the lender. However, there are still many misconceptions around short sales. Some of them are:

• I have to be in default for a short sale!

Fact is that you don’t have to be late on your mortgage to initiate a short sale. Some programs provide the biggest advantage if you’re current. We have completed short sales for home owners who were never late on their payment.

•  I am already in foreclosure and passed the short sale deadline!

While the chance of getting a short sale completed is getting smaller as foreclosure progresses, there is no deadline to apply for a short sale. We have completed short sales the day before the auction date.

• The Seller cannot receive any cash in a short sale transaction!

False again. While every situation is different, some programs offer thousands of dollars to the homeowner to complete a short sale and cash  will be paid as an incentive to the homeowner at closing.

•  I am filing bankruptcy to save my home and don’t need a short sale!

With some exceptions, filing of bankruptcy does not save homes, it simply prolongs the process. However, in certain instances  bankruptcy can be a great tool to avoid deficiencies and tax ramifications but it should be used strategically and only as a last resort.

•  I am letting it go in foreclosure to be done with it.

Foreclosure is not the end but the beginning of the problems which can hunt you for the rest of your life. Deficiencies, Judgement, Tax Problems, Employment Restrictions, higher costs for insurances and loans if you get them.

A correctly performed short sale can end your financial troubles and create the pad to a new financial start while a foreclosure is just the beginning of a financial disaster.  However, every situation is different and sometimes other solutions are much more suitable than a short sale.

With more than 10 years of experience and up to date education on distressed property situations we can help you finding the right strategy for your personal situation.

Feel free to use our resources on this website or call  us at (561) 242-3339 for a free consultation.

Sincerely,

Klaus Sinn

Certified Distressed Property Expert

Lic. Real Estate Broker