A short sale is an option you can explore to potentially avoid foreclosure, but depending on your situation, it may not be the best option. Short sales have pros and cons that vary based on the details of your specific situation.
If you are considering pursuing a short sale to avoid foreclosure, it may be a good idea to consult a foreclosure defense attorney beforehand. An experienced foreclosure lawyer can help you discover alternative options. Should you decide to go through with a short sale, they may be able to help you through the process and ensure procedures are followed correctly.
Joshua Denbeaux is an experienced foreclosure attorney who has helped thousands of New Jersey homeowners through foreclosure. If you need legal representation in a foreclosure case, you can schedule a free consultation today.
What Is a Short Sale?
A short sale is selling your home in an attempt to avoid foreclosure. It’s important to remember that before you can sell your home, the lender must approve a short sale. In addition to lender approval, there are a few other requirements that make a short sale different from a typical sale of a home.
To be able to sell a home in a short sale, the homeowner must have an eligible hardship. Eligible hardships could include unemployment, bankruptcy, divorce, death in the family, etc. You should be prepared to prove your hardship eligibility with documentation and financing information.
Many lenders are willing to work with homeowners to avoid foreclosure. If a seller decides to use a short sale, the lender avoids having to sell the property themselves. Additionally, a short sale allows the lender to save both the time and money that it would have cost them should they have had to pursue a foreclosure on the property.
Even if your lender approves a short sale on your property, it might not be the best course of action for you to take.
Is a Short Sale a Good Idea For You?
While a short sale is an option you can pursue to avoid foreclosure, you should consider exhausting all other options before selling your home. If you have already ruled out all other possibilities by speaking with an attorney and are still trying to decide if a short sale is a good idea for you, we’ve broken down some of the main benefits and disadvantages.
Benefits Of A Short Sale:
- Delay or stop foreclosure
- You might be released from your mortgage
- You could be approved for a new mortgage faster
- You may be able to stay in the home until the sale is finalized
Disadvantages Of A Short Sale:
- Must meet specific requirements to be eligible
- More complicated and a lengthier process
- The sale must be lender approved
- The bank or lender could pursue a deficiency judgment
- Your credit score will likely drop
- You WILL lose your home
A short sale is more complicated than a traditional sale because more parties are involved. Typically, the lender requires the home to be appraised before it’s sold, and the lender will have to approve the sale before it’s finalized. Because of this, a short sale can be a lengthier and more complicated process. If there are multiple mortgages on the home, every lender will be involved, making it even more complex.
When selling your home in a short sale, it’s possible that the amount of money the home sells for might not cover the total amount you owe on your mortgage. In this scenario, your lender could go to court and order a deficiency judgment. That means you would be held responsible for paying the difference to your lender, even after selling your home.
A short sale typically has a smaller impact on your credit score over time than a foreclosure. Still, it’s important to be aware that selling your home through a short sale will likely have a negative impact on your credit.
The most significant disadvantage of selling your home in a short sale is that you lose your home in the end. We understand this may be the only option for some, but for those that haven’t exhausted all other resources, there may be other options to delay or stop foreclosure without having to sell your home.
Talk To a Foreclosure Defense Attorney Today
Depending on your situation, a short sale may or may not be the best option. If you are struggling to pay your mortgage and want to avoid foreclosure as much as possible, you may have other options for handling the situation without having to sell your home.
An experienced foreclosure defense attorney like Joshua Denbeaux may be able to help you decide the best course of action for you and your particular circumstances.
The lawyers at Denbeaux & Denbeaux Law have more than 15 years of experience representing homeowners in foreclosure cases. Contact us today to set up a free consultation to learn more about your options to protect yourself from foreclosure.