Is short sale better than foreclosure?

Is short sale better than foreclosure?

Timing also differs: Short sales can take up to one year to close, while foreclosures generally move along much faster because lenders are intent on recovering the money they’re owed. Furthermore, a short sale is far less damaging to your credit score than foreclosure.

Do banks prefer short sale or foreclosure?

Short Sale Pricing The short sale asking price is usually higher than the pricing at the foreclosure auction — a 19 percent loss of the loan balance for short sales. In contrast, a foreclosure typically nets a 40 percent loss of the loan balance. In this regard, lenders prefer short sales over foreclosures.

Which is the most likely consequence of a short sale?

But a short sales results in a loss on the loan, and the end of interest payments and servicing charges that represented the lender’s profit.

Can a bank foreclose on a short sale?

Consumer Protection Laws. States have the power to stop banks from foreclosing on homes when a short sale is in progress. In California, for example, the Homeowner Bill of Rights strips banks of the right to foreclose on a property if the bank and all other lien holders have approved the property for a short sale.

What happens if bank does not accept short sale?

If the lender approves the offer, the short sale moves forward. If the lender does not accept the offer, the buyer may counteroffer or end the process.

Why are short sales bad?

Short sales are a mixed bag for the buyer, the seller and the lender. If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live.

Who benefits from a short sale?

For the seller, a short sale presents less damage to his credit report than a foreclosure, and allows him to recover and buy a new house more quickly. This sense of cooperation between the seller and buyer may facilitate the exchange and get the new owner into the house more quickly.

Is a short sale good for a buyer?

In short, short sales are a good idea if you have plenty of time and money. A short sale buyer may get the property at a reduced price, but the property (in all likelihood) has its share of problems — think “fixer-upper” — and the deal needs to go through considerable red tape to make it happen.

What is the average time for a short sale to close?

Once an offer is received and signed, I send it to the bank, along with the seller’s short sale package and a prepared HUD. From that point to the time of short sale approval, the average timeline is about 60 to 90 days. It means 30 days to sell + 60 days for approval + 30 days to close escrow = 4 months, on average.

Who pays the closing costs on a short sale?

These seller closing costs include things like property transfer fees, realtor commissions and attorney or title company fees. In a short sale transaction on the other hand, the seller’s closing costs are usually paid out of the money the buyer brings to the closing.

Can I negotiate a short sale price?

Can You Negotiate A Short Sale? It is entirely possible to negotiate a short sale, but doing so can be a time-consuming process. Instead of negotiating with the seller alone, as is the case with most traditional sales, short sale negotiations must be approved by the lender, too.

Are short sales cash only?

No cash-out A short sale means they won’t earn any profit from the sale of the house – the bank or mortgage lender gets all the sales proceeds.

What should I offer on a short sale home?

When making short sale offers, the following tips will help investors get their offers accepted.

• Provide A Strong Earnest Money Deposit.
• Do Your Homework.
• Make Sure The Short Sale Is Lender Approved.
• Give The Bank Ample Time For Approval.
• 3 Benefits Of A Cash-Out Refinance On Investment Property.

How do I talk to my bank about a short sale?

Negotiating With the Short Sale Negotiator

1. Get the name, phone number (and, if possible, email) of the negotiator.
2. Withhold your disappointment if that negotiator is no longer available when you call.
3. Find out the bank’s objectives.
4. Don’t take no for an answer.

How can a lender agree to a short sale?

Ideally, it’s best to choose someone who’s familiar with the local market and specializes in short sales. You’ll need to include a letter that notifies the bank of who your agent is and authorizes them to make decisions on your behalf. Your package should also document your financial reasons for seeking a short sale.

How do you win a short sale?

How to Make a Short Sale Offer

1. Offer a Strong Earnest Money Deposit.
2. Check the Comparable Sales.
3. Don’t Ask for Special Reports or Repairs.
4. Give the Bank Some Time.
5. Assure the Seller You’ll Wait.
6. Offer to Pay the Seller’s Fees.
7. Shorten Your Inspection Period.
8. Provide a Strong Preapproval Letter.

What percentage of short sales are approved?

Even when the buyer and the seller have both signed the paperwork — indicating a binding contract — only about 40 percent of short sales ever close at all.

Do Banks approve a short sale?

A short sale is considered a pre-foreclosure transaction, and the lender must issue approval.