Are you facing foreclosure? You might have heard that a short sale could be a possible solution to your problem. While selling your Charlotte NC home as a short sale is not ideal, many argue that it’s the smarter move.
While losing your home is never easy, a short sale is by far better than facing all the devastating effects of a foreclosure. With a short sale, your bank or lender allows you to sell your home for less than what you owe. The expectation is that, if the home sells, the lender will recover much of the homeowner’s debt. This saves the lender the cost of a foreclosure suit and the potential long-term cost of owning a hard-to-sell foreclosed home.
Here are six compelling reasons why a homeowner seriously considers a short sale:
1. It creates less credit damage compared to a foreclosure.
2. It gives you more control over the situation.
3. It prevents foreclosure.
4. It offers peace of mind and closure.
5. It helps your lender, which in turn helps you.
6. It helps you to avoid scams.
Reasons for doing a short sale
1. Creates Less Credit Damage
Both foreclosure and short sale will have a negative impact on your credit rating. However, your credit record probably won’t suffer as much as if you went through foreclosure. You can lose as much as 35 percent from your credit score by the time the foreclosure process is complete.
A foreclosure will stay on your credit report for at least seven years. Lenders also have legal rights to pursue you for the unpaid balance. Their legal actions can further harm your credit. It can make it more difficult to borrow money for another home, car, or major purchase.
2. Gives You More Control
A foreclosure is initiated and managed by the lender, as well as the laws governing the proceedings in the state. Once the ball starts to roll, the homeowner can expect an arduous and stressful process.
The homeowner will receive demand letters and other documents. There will be constant communication with the lender’s legal team. The homeowner can also be evicted during or immediately after the foreclosure process ends.
There are still negotiations, meetings, and paperwork if you choose to do a short sale instead. The difference is that the process is structured like a traditional home sale as opposed to a litigious and pressure-packed foreclosure proceeding.
You will work with a Charlotte NC short sale agent, like me, to list and show your home to prospective buyers. Your lender will give you a short sale time frame to complete the sale. This will give you enough time to pack and find a new place to live.
3. Prevents Foreclosure
When you do a short sale, you avoid having your home foreclosed upon. A foreclosure can have many adverse effects. The forced loss of your home can cause you to feel shame, anger, or sadness. Even if the situation is beyond your control, a foreclosure carries the stigma of failure and personal irresponsibility.
Here are other negative effects of a foreclosure that you can avoid when you do a short sale instead:
A foreclosure entails the surrendering of your property. It also means that any equity in the home becomes the lender’s property. This is regardless of what you owe and how much the home is worth.
It also means that your down payment, as well property value increases and the value of any upgrades you have made are lost. To make things worse, if the property sells at a loss, the leader may decide to file charges against you for the remaining balance to recover funds.
- Credit Availability
After a foreclosure, it will be difficult to get credit for a few years. If ever you manage to secure one, it will usually come with high-interest rates and low limits. The longer you wait to regain your creditworthiness, the harder it will be.
During the interview process, some employers look into the credit of prospective employees. The negative effects of a foreclosure on your credit rating could cost you a job. It might also make your current work situation difficult. The best way to manage this is to deal it with it up-front and prepare a reasonable explanation.
Aside from the homeowner, a foreclosure also affects the community. A growing body of research shows that foreclosures result in vandalism, negative neighborhood perception, and reduced property values. The price drop could be as high as 8.7 %.
4. Offers Peace of Mind and Closure
Most real estate transactions are taxing by nature. However, they don’t compare to the demands and pressure that a homeowner goes through during a foreclosure. It is a psychologically draining experience. The overall stigma attached to it can be quite nerve-racking.
A short sale will not completely wipe out the financial consequences of being unable to pay for a home you have purchased. Nevertheless, it will provide more solutions for you. A short sale will allow you to avoid the legal action and the long, arduous process of foreclosure.
Choosing to do a short sale will put you in a much more positive position. It will also give you a sense of closure to your homeownership. You will have enough time to adjust to your new financial reality. A short sale will also give you hope and offer you an opportunity to start rebuilding your credit rating.
5. Helps Your Lender
Your lender will also be adversely impacted by a foreclosure. Your lender will spend time and money in sending notices and warnings. Then, your lender will also deal with additional expenses as the foreclosure moves into the courts.
After the foreclosure sale, your lender may take legal actions against you to recoup money that’s owed above the amount that a home was sold for in a foreclosure, adding to legal costs.
When lenders agree to a short sale, they can recover part of the money that’s owed on the home. They would lose much more money and time if the property went into foreclosure.
6. Helps You Avoid Scams
It’s disheartening enough to face foreclosure on your home. What’s even worse is the reality that there are scam artists preying on desperate and vulnerable homeowners.
Foreclosure rescue and mortgage modification scams are a growing problem. They steal millions of dollars from distressed homeowners by promising immediate relief from foreclosure and guaranteeing to lower mortgage payments. Sometimes they even go as far as claiming that they have direct contact with mortgage companies.
The scam artists use deceptive messages, like:
- We can stop your foreclosure!
- Over 95% of our customers get results.
- We have special relationships with banks that can speed up the approval process.
- Guaranteed to save your home!
Homeowners who fall into these fraudulent deals usually come out owing even more money and with no relief from foreclosure.
Here are some warning signs that you should be aware of:
- Avoid any individual or company seeking to charge you in advance for mortgage modification services.
- Don’t fall for promises to find mistakes in your loan documents that will force your lender to cancel or modify your loan.
- Don’t do business with anyone that advises you to stop making your mortgage payments or discontinue contact with your mortgage company.
- Beware of anyone who guarantees to stop a foreclosure.
When you choose to do a short sale, you greatly lessen opportunities for scam artists to take advantage of your situation. Since the short sale process works very much like a traditional home sale, you will get to know the professionals you are working with. This will remove the risk of involving a scam artist in the transaction.
Work with a trusted Charlotte NC short sale specialist
If you need help with selling your home as a short sale or you need more information about the process, I’d be more than willing to assist you. With more than 20 years of successful experience in real estate and the mortgage market, you can be sure that I’ll be able to bring excellent results to the table.
Call me, Nancy Braun, at 704-997-3794. I am your top Charlotte NC short sale agent. Let’s get started today!