What is a short sale and how can it help homeowners facing foreclosure?
One of the many strategies Minnesota residents can take to avoid foreclosure is to go through the short sale process.
One of the many strategies Minnesota residents can take to avoid foreclosure is to go through the short sale process. If you have decided that given your current financial situation and the mortgage you are currently contracted to that it would be better for you to let go of your property, a short sale may be the way to go.
Of course, before heading down this path you should always consult an experienced Minneapolis foreclosure attorney, who can advise you on the pros and cons of short sales based on your family’s particular circumstances.
In a short sale, the home is typically sold for less than the value of the mortgage remaining on the property. Sometimes the deficiency, or the difference between the sale value and the mortgage value, will still need to be paid by the homeowner. However, often the bank is just as interested in releasing themselves from this contract as you are.
Short sales occur during the redemption period, which typically lasts from six months to a year following the date of the sheriff’s sale. With the help of a qualified real estate agent or attorney, the property will be listed on the normal market – the price will be lowered periodically until an offer is received for the house.
If that offer is approved by the bank the seller will be released from their mortgage. However, some second and third mortgage lenders, will still attempt to collect the deficiency amount unless that is specifically negotiated during the short sale.
If that offer is approved by the bank, which in most cases was the buyer during the sheriff’s sale, the seller will be released from their mortgage.
The benefit to a short sale is primarily that a foreclosure won’t show up on your credit history. There are no mandatory reporting guidelines for short sales, so the seller will not have to disclose this action when they request loans in the future.
To get foreclosure advice or to determine whether a short sale or another alternative tactic is the right choice for your family, contact one of the experienced lawyers at Atlas Law Firm.