What is a Short Sale?

Foreclosures are at record highs, leaving banks with burden of selling off homes to recoup their money in a time when few people are buying. At the same time, borrowers are drowning financially in homes they can no longer afford to pay for. Short sale is a way for both parties to minimize their losses.

Short sale is a process in which your bank agrees to you selling your home for less than you still owe on the mortgage and forgive the remaining balance. Essentially you are “shorting” the bank on your mortgage. It allows you to escape from a mortgage payment you cannot afford and generally costs the bank less than taking your home through foreclosure. Everyone wins: you get out of your home that you cannot afford, the bank saves money and buyers can scoop up houses for a fraction of the market value.

If you are struggling to pay your monthly mortgage payment or are already several months behind, short sale may be a way to avoid foreclosure in Miami. Foreclosed homes are a burden on the bank because the process costs them money and then they have to sell the home in an effort to get some of the money they invested back. Do not wait to contact a Miami foreclosure attorney if you are behind on payments. Waiting too long puts you at risk of being foreclosed upon or even being forced to file bankruptcy. If you have already tried to modify your mortgage and were turned down or still cannot afford the payments, a short sale may be a good option for you.

The bank is usually forgiving some of your debt, which means that short sales Miami may still impact your credit score. But a foreclosure or bankruptcy on your credit is far worse. Also keep in mind that the bank does not always agree to forgive the outstanding mortgage amount, so read documents carefully. If your lender determines your finances are too strong, or if you own multiple properties, they many require you to pay the outstanding balance. If the remaining balance is not forgiven, you will still have eliminated a large portion of your mortgage.

When looking for a buyer, make sure they are not only aware that it is a short sale but also that they understand what it means. Short sales in Miami do not mean “quick” sales. Once your lender has approved the offer and the buyer has secured financing everything will happen quickly, but just getting your bank to respond the offer could take a month. Make sure they know what you can afford to fix in the home, which is probably nothing. Your buyer needs to understand if your property is a fixer upper they are purchasing as is. Ensure the buyer knows how short sale works will minimize the chances they will back out at the last minute and send you into foreclosure.