A Short Story About Short Sales

Short Sale StoryLet’s say you did everything right: You bought a nice house after careful consideration and you had enough money to pay your monthly bills. But then one day you’re slammed with whopping medical bills or you have to relocate for work.

Suddenly you need to sell your home – and unfortunately, it’s now worth less than your mortgage.

This is why many home sellers are turning to short sales to get out of financial trouble. In a short sale you sell your property and your lender or lenders consider accepting less than the full amount of mortgage you owe.

I talked with Frank Joesph, the owner of Residential Realtors Northwest, LLC, a Real Estate firm specializing in short sales for advice, as well as how a short sale might benefit home sellers. He told me some positive news:

First, your credit isn’t as badly affected if you go through a short sale versus a foreclosure. If you go through a foreclosure, you may not be able to buy another house for many years. But, if you do a short sale and the bank accepts less than you owe, you may be able to purchase another home in one to three years.

Another worry short sale home sellers have is that they’ll have to dig into their 401K accounts to pay off their loans. Frank told me this isn’t usually the case, and that there’s a good possibility that a seller’s 401K will not be affected.

In terms of short selling advice, Frank recommends selecting a Realtor with experience handling short sales and negotiating with all parties involved. A short sale transaction will also flow easier if you’re able to quickly provide all of the documents necessary, which can include past bank statements and tax returns, pay stubs, a statement of liquid assets, utility bills, a hardship letter stating your circumstances, Home Owner Association information (if applicable) and any other documents requested by lenders.

Because short selling is a complex, continually evolving topic, your best bet is to talk personally with someone experienced in the field, who can tell you much more than I can in this short blog post. But I did want to give you the basics in case a short sale is in your future.

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