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Pre-Foreclosure Short Sales |
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Pre-Foreclosure Short Sales |
It isn't unusual for homeowners to find themselves in the situation where they are having difficulty making the monthly payments for their home loans and the loan(s) are either close to, or exceed the value of the home making a refinance virtually impossible.
When this situation exists, and the lender and homeowner both believe a foreclosure is inevitable, a short sale is often a way to control losses for everyone concerned. The property is listed for sale with a real estate agent at, or slightly below, the property's "as-is" current market value, with the lender agreeing, in concept, to take a reduced payoff on their outstanding loan amount. When an offer is submitted on the property, the lender will receive a package outlining the offer and agree, disagree or negotiate the sale price.
The benefit to both parties are that the homeowner doesn't suffer the credit impacts/ stigma of foreclosure and the lender can clear a non-performing loan without the associated costs of foreclosure, eviction and property rehabilitation. Short sales are much more difficult when there are loans with different lenders against the property requiring different lenders to agree on the amounts they will reduce their loans.
A short sale is a viable alternative to foreclosure when foreclosure is imminent and unavoidable, property values do not support a price sufficient to pay the loan in full and the borrower will not receive compensation from the sale. Short sales are also greatly preferred by lenders over a common borrower decision to give the lender a deed-in-lieu of foreclosure.
