Short Sales VS Foreclosure - You Have A Choice

Short Sales have become fairly common since the real estate bubble burst a couple of years ago. More and more families are finding themselves without jobs, with increasing costs of living, or with changes in their income that make it difficult or impossible to stay current on their mortgages. A short sale is when the bank holding the mortgage agrees to accept an amount less than the mortgage amount if the house is sold. The term "short sale" actually comes from selling a home short of its original mortgaged value. With home values dropping 10-40% depending on location and markets, banks have had to take on short sales in lieu of foreclosures to stay afloat.

A side product of short sales is that it can keep home values higher than if homes are sold through foreclosures. Foreclosure sale prices can significantly deflate home values in the area because similar homes that are not in foreclosure don't sell because of the cheaper options. Short sales can still lower property values, but not near as much as foreclosures. Homes in foreclosure tend to have lots of items that need to be repaired or refinished - either from malicious damaged caused by the previous owner, or from sitting vacant for long periods of time. Short sales usually don't have these types of issues, as it is in the best interest of the home owner to keep the home in top condition for the best chance at selling the home. This subtle but major difference in the stage of the home's ownership can cause dramatic swings in the asking price and valuation of a home.

The short sale process can be more difficult than a traditional home sale due to the extra approvals, red tape, and lengthy process. You really need a qualified, certified real estate agent to help navigate the process, because unexpected delays can cost money, and may end up costing you the sale. Having someone who knows the process can help buyers and the home sellers know what to expect, understand the timeline, and see the process through to completion. With lots of homes in the system, sometimes approvals and closing the deal can take months, and both parties need to be aware and informed about how to handle that process.

If you are a buyer, then short sales can be a great option to get a great deal on a home and help out a struggling home owner. A certified agent can help you find homes that qualify for short sales based on information in the MLS data. Knowing what homes may qualify can help you find great deals. You can also search by the number of days on the market, and find homes with motivated sellers.

If you are a seller, then you are at an advantage in the market against homes that do not qualify for a short sale, as the asking price is usually less compared to non-short sale listings. Buyers can get more house for the money with a short sale, and with the right marketing approach and real estate agent, you can be successful selling your home via short sale and avoiding foreclosure.