What is a short sale and how does it benefit you in Stockton?

In this article we’ll look at the Short Sale as a way to Avoid or Stop Foreclosure in Stockton. Until the crash of the real estate market a few years ago (also known as the Bubble) a Short Sale was unheard of. Lenders were not offering homeowners any relief from mortgages that exceeded the total value or worth of the house.

Times change and whether or Not the Banks and Mortgage Companies were pressured during the foreclosure crisis to create a Short Sale option, the concept is alive and is certainly a homeowner option if your home mortgage is underwater or upside down.

What is a Short Sale?

A short sale is simply a method to sell your house short or less than the total amount owed to the mortgage company for that house. It has been used as a way to mitigate a foreclosure on a mortgage, where the principal amount owed was greater than the value of the house itself. Although a Short sale can be more difficult to attain in today’s market, (as property values have risen in recent years) they were in the recent past used often to be a simpler way to resolve a foreclosure. It wasn’t until the banks and mortgage companies also began to forgive debts not covered by the short sale of the house that the practice became more common and mainstream. Interestingly, the Federal Government and the IRS also redefined its posture on those debts that we forgiven and waived subsequent taxes that would have otherwise due.

So are short sales a thing of the past in the Stockton market? I think that there is evidence to support the notion that Short Sales are going to fade away as foreclosures continue to slow and home values continue to climb back up to levels before the crisis.  I also think that the evidence supports the notion that Mortgage Companies are not going to continue to offer Short Sales as an ongoing Option for homeowners that find themselves unable to pay their mortgage unless there is a mutual benefit to do so.

Here are a few reasons you may want to consider short sale on your Stockton home

You Avoid Foreclosure And The Harmful Effects Of It

The best benefit of short sale is that you avoid a foreclosure on your home through the sale of your house.. Your mortgage lender accepts less than what is owed on your mortgage, leaving you without the debt that you cannot afford.

Foreclosure itself can lead to all kinds of financial problems for homeowners, starting with the credit woes that will prevent a homeowner from obtaining a new loan for a home as a stays on your credit record for up to 7 years.

Even renting will become more difficult as your credit score would be negatively affected, and you often have to disclose a foreclosure on a rental application.

Credit Worries

By Avoiding or Stopping a foreclosure, you dodge numerous negative hits on your credit and other ramifications when applying for the simplest of credit items. Utility accounts, credit cards, buying a car and renting a house may be impossible through the normal process.

If you work with money at your job you could even face termination if your employer puts a lot of emphasis on financial stability as desperate people have been known to make poor choices (most employers won’t but it has been reported at financial institutions where they need to know that employees can be bonded).

A short sale can relieve the debt that is left over from what is owed on the mortgage, letting both the bank and the seller move on. A short sale is also easier on your credit score, which can allow a homeowner the ability to recover in in a much shorter period of time. Your credit report will only show a pre-foreclosure status, which reduces your credit rating marginally as compared to a foreclosure and for a considerably shorter period of time.

But the Buyer Beware: The practice of forgiving dept or even the tax burden for the forgiven debt is NOT guaranteed as a part of a Short Sale itself. While a Short Sale may effectively sell your property the effects of that sale can linger for years in the form of debt.

Buying a New House

So, now we know that the effects of a foreclosure, like a bankruptcy  can last several years, making it impossible to purchase a house with a mortgage for up to 7 years.

Short sales offer a little more flexibility for the seller, allowing new home owner applications only 2 to 3 years after the filing depending on the bank. It also makes a mortgage lender more likely to approve your loan than if you had an actual  foreclosure. All of this means getting getting you back into a home faster.

Again, this all depends on the actual bank / lender you’re working with… so if they’re still resistant after two after two years from a short sale… shop around and find another bank to work with.

Usually No Fees Involved

One potential benefit of the short sale is that there are usually no fees associated with the processing from the bank.  The banks just want to get the note off of their books… and if it can be proven that your house is “underwater” (you owe more than your house is worth)… and you’re at the risk of walking away from the house… the bank may rather work out a short sale instead of going through the costly foreclosure process.

With a foreclosure, your mortgage lender may tack on extra legal fees and penalties that only make the damage much worse.

Some real estate firms may charge a fee for helping facilitate the stopping of a foreclosure with your bank… its NOT legal so check with them before you enlist a real estate agent or firm in helping you with this.

Westbrook REI is a Certified Foreclosure Specialist and can help explain the options: We have seen first hand both the negative and positive effects of a Foreclosure and short sale can have on a family. It is also important to understand that a Short Sale is not the only option to Stop a Stockton Foreclosure and in fact may not even be available in some foreclosure situation. If you want help evaluating a short sale in Stockton area Call Us at (209) 481-7780 or send us an email contact page here.

Getting a Short Sale – What You May Need To Provide

The final step in getting Short Sale approval is proving a Hardship in writing. You need to make the case as to why the bank should waive the debt and allow the short sale. That means proving a hardship exists and plenty of documentation. This can be difficult and is best resolved by finding a good real estate attorney in your area that has experience dealing in this type of law. Of course that means more time and money.

If you don’t know who to contact or where to turn to see if a short sale may be a good option for you… call us at (209) 481-7780.

We DO NOT charge anything to discuss your situation with you and let you know your options.

In most cases we’re actually able to do the work for you, leaving you with greater piece of mind. Our track record shows that we may even buy the house from you to get you out from under the mortgage… it may actually be the most viable option for you.

We buy Stockton houses and we work with home owners like your who are having troubles getting out of a burdensome house.

Call us to discuss your situation. We’re here for you!

If you want to see what we can offer on your house… click the link below and fill out the form on the next page. We’ll make a no-obligation cash offer to you within 24 hours. At least you will know whether that is an option for you.

Get A Cash Offer On Your Stockton Area House Here >>

 

Peter Westbrook

About Peter Westbrook

Peter Westbrook is a local Cash Home Buyer / Real Estate Investor in Stockton, Sacramento and Modesto CA and Tulsa Oklahoma. He has written numerous real estate articles that have been published here and by other blog and news outlets. Peter has appeared on several local and national news reports regarding the state of the Stockton and Sacramento Real Estate Markets.

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