What is a Short Sale and How Can it Benefit You in Los Angeles?

what is a short sale los angelesWhat is a short sale and how can it benefit you? Great question!

In this article we’ll dive into the question of what is a short sale so you as a Los Angeles homeowner can tell what your options are during foreclosure or if your home mortgage is just underwater.

What is a Short Sale?

Your may run into a major obstacle in selling your property if its market value has fallen below the amount you owe your lender. In this case, you have “negative equity.”  In other words, your property is “under water;” you owe your lender more money than your property is worth! If you were to sell your property, you’d have to add money at the closing because your lender is entitled to full repayment of the loan.

One of the best solutions is called a “short sale,” “short pay,” or “short payoff.” What is a short sale? It is a procedure that allows you to sell your property for market value and all the proceeds from the sale go to your lender for payment in full, even if it doesn’t cover the entire payoff amount.

A short sale can be a smart way to mitigate foreclosure (here’s a great definition of what a foreclosure is in case you’re not sure) on a mortgage. Although they can be difficult to attain in today’s market, they often prove to be a simpler way to resolve any debt left over from a loan.

Short sales were really common in the market a couple years back when the flood of foreclosures hit the Los Angeles market… but as foreclosures have slowed down and home values have climbed back up … lenders are a little less likely to offer a short sale as an option as they used to be (but they are still doing a lot of them!).

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

1. You Avoid Foreclosure and The Harmful Effects of It

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

Foreclosure can lead to all kinds of financial problems, starting with the inability to obtain a new loan for a home because a foreclosure stays on your credit record usually for up to 7 years. Even renting will become more difficult.

2. Credit Worries

With a foreclosure on your record, buying a car and renting a house may be impossible through the normal bank loan routes.

Many job applications ask if you have been in a bankruptcy or foreclosure. If you work with money at your job you could even face termination if your employer puts a lot of stock in that kind of thing (most employers won’t but it has been done before).

A short sale is easier on your credit score, which can allow a homeowner the ability to recover in the long run. Your credit report will only show a pre-foreclosure status, which reduces your credit rating minimally compared to a foreclosure.

3. Buying a New House

A foreclosure can last for a long time, making it impossible to purchase a mortgage again for up to 7 years.

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

4. Usually No Fees Involved

One potential benefit of the short sale is there are usually no fees associated with the process 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 a costly foreclosure.

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

Getting a Short Sale – What You May Need To Provide

You will have to provide the bank with proof of being unable to pay your mortgage payments. You will also have to submit a hardship letter as well as other supporting documentation.

This can be difficult and is best resolved by finding a good real estate professional in your area that has experience dealing in this type of sale.

If you don’t know what is a short sale, who to contact or where to turn to see if a short sale may be a good option for you… get a hold of us.

We won’t charge a thing to discuss your situation with you and let you know your options or may be able to guide you in the right direction on how to give yourself the best shot at a bank approving a short sale.

And we can even give you guidance and pointers at absolutely no cost or obligation.

so connect with us by calling (818) 392-4845 or shoot an email to us through our contact page here.

Sometimes we’re actually able to do the work for you or even buy the house from you to get you out from under that mortgage… so that may be a viable option for you.

We buy Los Angeles houses and we work with home sellers like yourself who are having troubles getting out of your house the traditional way… or who can’t (or don’t want to) go the usual route of listing with an agent.

Get a hold of us anytime to discuss your situation. We’re here for you!

Or, if you want to see what we can offer on your house… click the link below and fill out the short form. We’ll make a no-obligation cash offer to you within 24 hours. At least that way you know whether that is an option for you or not.

Get A Cash Offer On Your Los Angeles Area House Here >>

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