Short Selling Risks
A short sale is another option aside from foreclosure and although it is loaded with risks, there are still a lot of people who opt for this even if it can ruin an investor’s business and jeopardize a home owner’s plan. Short sale is a procedure that rescues a homeowner who can no longer afford to pay for their home loans, but there are things that you can do to avoid these pitfalls like being familiar with the things that can go wrong in a short sale procedure.
Since short sales may take some time like up to six months, there might be delays especially when it comes to approval. Some homeowners don’t expect to be approved in this situation. Thus, time is the first adversary of both investors and home owners. One major reason that lenders decline offers is because of the low offer. Thus, as a homeowner you have to make a counter offer or increase your offer price.
The damage on your score is another major risk to consider in short sale. Credit damage in a short sale is not that severe compared to a foreclosure. Your FICO score can go down around 75-125 points and your record will just have a pre foreclosure in redemption, a report which is not as bad as a foreclosure. Like foreclosures, short selling your property can damage you in the long term. Even if it allows you to save money in the short term, you will not be qualified for a new home loan for at least a year and a half which still depends on your credit record and payments.
Time lines are significant in a short sale proceeding. Accordingly, upon authorization from the lender banks will give a specific period within which sellers or homeowners should ready their financing and therefore close the deal.
Approval of short sales don’t happen overnight. It takes time before it can be approved. For one, lenders need to know the seller’s financial difficulty that forced them to stop making payments. In this case, sellers’ or homeowners’ need to pass a statement of hardship or a hardship letters, along with their proof of income, bank statements, etc., that explains their financial difficulty.
Since it takes time before a short sale can be approved, it is important that sellers are informed with the time lines and necessary procedures involved in a short sale. On the other hand, Realtors are aware of the fact that buyers may back out especially if they notice problems or repairs to Highlands Ranch CO Homes. Thus, it is important that Realtor give buyers time to inspect the property so they know where their money is going.
Since short sales may take some time like up to six months, there might be delays especially when it comes to approval. Some homeowners don’t expect to be approved in this situation. Thus, time is the first adversary of both investors and home owners. One major reason that lenders decline offers is because of the low offer. Thus, as a homeowner you have to make a counter offer or increase your offer price.
The damage on your score is another major risk to consider in short sale. Credit damage in a short sale is not that severe compared to a foreclosure. Your FICO score can go down around 75-125 points and your record will just have a pre foreclosure in redemption, a report which is not as bad as a foreclosure. Like foreclosures, short selling your property can damage you in the long term. Even if it allows you to save money in the short term, you will not be qualified for a new home loan for at least a year and a half which still depends on your credit record and payments.
Time lines are significant in a short sale proceeding. Accordingly, upon authorization from the lender banks will give a specific period within which sellers or homeowners should ready their financing and therefore close the deal.
Approval of short sales don’t happen overnight. It takes time before it can be approved. For one, lenders need to know the seller’s financial difficulty that forced them to stop making payments. In this case, sellers’ or homeowners’ need to pass a statement of hardship or a hardship letters, along with their proof of income, bank statements, etc., that explains their financial difficulty.
Since it takes time before a short sale can be approved, it is important that sellers are informed with the time lines and necessary procedures involved in a short sale. On the other hand, Realtors are aware of the fact that buyers may back out especially if they notice problems or repairs to Highlands Ranch CO Homes. Thus, it is important that Realtor give buyers time to inspect the property so they know where their money is going.
Filed under News by on Feb 19th, 2012. 