What Is A Short Sale & Should I Do It?

With the housing market in such an unstable and unpredictable condition, homeowners in Austin and around the country want to know what their options are should they decide to put their house on the market. One of the options that has been becoming increasingly popular – or that has at least been happening with greater frequency over the past several years – is the short sale. In layman’s terms, a short sale is the sale of a home for less money than the total remaining mortgage owed. Homeowners sometimes choose a short sale because they cannot afford to continue making their mortgage payments. In a successful short sale, the bank will take the loss on the house instead of the homeowner! The homeowner will be free from any fees and costs associated with that property.

Are Short Sales Recommended?

There are a number of factors that determine whether or not a short sale is the right option for a homeowner. There is a common misunderstanding among the general public that short sales are a way of protecting your credit. This is not entirely accurate. Falling behind on your mortgage payments – which is what instigates the need for a short sale in the first place – will adversely affect anyone’s credit regardless of whether or not a short sale is implemented. One exception to this, however, is that if the borrower has no late payments of 60-plus days on their credit report, they may still qualify for another home loan. This is typically a dead issue in the world of short sales though, since most people who pursue a short sale option are already at least 90 days overdue on their mortgage payments.

Many real estate agents will recommend a short sale and make it sound like a blessing to the seller, but it is the seller’s best interest to be as educated as possible about how a short sale is going to impact his or her specific financial situation and credit rating. When a homeowner owes more than there house is worth, there are several options to sell their house, however a short sale is the only option a real estate agent can provide them because that is the only way they can get paid. The agent makes no money if the home ends up going through the foreclosure process and is auctioned at the courthouse.

Short Sale Austin TXThere is, however, significant upside for the seller on a short sale. First of all, there is the avoidance of foreclosure, which is always beneficial. The seller is free from the monthly weight of mortgage payments and has walked away from the sale with at least some degree of dignity intact knowing that they made a successful sale of their home. If certain eligibility requirements are met, sellers can buy another home in as little as two years as opposed to the seven that it would otherwise take for a negative mark to disappear from their credit report. This is what motivates most sellers who find that a short sale is their best or only option. The situation is different for every seller, but in most cases two years is the longest they will have to wait to buy another home and some are even eligible immediately with a clean enough credit report.

Need To Sell Your Home Quickly?

If you’d like more information about short sales, have questions about how Tally Two Investment Group can provide options a Realtor cannot provide, or just want to sell your home quickly for cash in the Austin area, feel free to give us a call at 512-763-0883.