The difference between foreclosure and short sales
Methods of financial relief for over committed home owners.
A Fortune With Foreclosure Short Sales.
The new buzz around town regarding real estate matters is the term short sale. With the past fast paced, frenzied market accompanied by large increased amounts of equity, buyers were panicked regarding home affordability. With that urgency, new creative financing was exercised by many home buyers. The realization of those adjustable loans, and all other "buy now and worry about the payments later" jargon is now reality. The over committed home owners are reeling with need to find a solution to their current dilemmas.
The current stats reveal that 90 percent of home owners do not understand the difference between foreclosure versus short sale. Basically and simply, a short sale implies a late payment status with a clean up period of about 2 years. A foreclosure impacts the consumer's credit rating and will impact any credit possibilities for the next 7 to 10 years. Obviously, the short sale is the preferred method in saving one's credit position. When considering either method, it is always important to seek legal and or tax advice prior to entering into a listing agreement.
Short sales require the sale of the home, where as the lender agrees to accept payment less than the full amount owed on the home in order to permit sale of the property. Once the lender agrees, the home is placed on the market while yet in pre foreclosure status. The pre foreclosure status is approximately 90 days before home is auctioned unless otherwise negotiated with the lender. Since time is of the essence, sellers must act quickly.
Manuel Landavazo, adviser and owner of Fore Solutions, a company that represents a network of cash investors and specializing in short sales said, "As the home owner decides to pursue the short sale method, the lender is contacted by the adviser with the permission from the home owner. The adviser will supply to the lenders documents along with a letter of hardship, describing the homeowner's current financial position, revealing why the homeowner is unable to make mortgage payments. The advisor will then negotiate price and terms of the short sale acting as the liaison between home owner and lender." Landavazo further stated, "All lenders will treat every case with individual attention and make decisions according to those circumstances. Circumstances that lead to such financial difficulties would include, job loss or transfer, divorce, medical, death or other distress related issues."
Working with the lender requires patience and diligence. It is important that the potential buyer has a full understanding of the process and is flexible in their time requirements. When working with the lender, all are at the lender's mercy.
It is important for the homeowner to stay focused on the relief, and educate themselves to accomplish their goals in order to quickly remedy their current predicament. Denial of one's financial responsibilities will certainly spin into foreclosure. Start planning now regarding housing in the interim period of reorganizing your finances and gaining the ability to once again become a home owner.
Sherrie LeVan of Front Street Realty is a resident of Ladera Ranch and a Realtor of the South County area for 9 years. If you have questions regarding your Real Estate needs, give her a call at 949-874-4030 or e-mail her at Sherrie4re@cox.net.
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