Are Short Sales Still A Good Idea in 2015?
Are short sales still a good idea in 2015?
As a realtor, I will be the first to say that short sales can be a real pain in the rear. However, despite the paperwork, haggling and the uncertain timelines —- short sales are a good idea for underwater sellers.
5 Reasons to Consider a Short Sale:
- More Control – One of the biggest reasons to consider a short sale is that you have more control in the process of settling your mortgage. It is true that the banks (and the current market) ultimately decide what the dollar amount they are willing to accept but the homeowner has a greater role in when the home is sold and a seat at the table in negotiating the terms of the sale.
- Timeline of Sale – In recent years, many foreclosures in the Chicago area have taken years to complete foreclosure. A short sale gives the homeowner more certainty in when the home is sold. Can you imagine finally bouncing back from a job loss or divorce to find you can’t get a mortgage because the actual foreclosure sale was a lot later than you thought? Or, checking two years after you’ve decided to leave your house for the bank and finding out it’s still in your name.
- Protection of legal interest – “Zombie foreclosures” are homes abandoned by the homeowner but not yet possessed by the banks. This is a significant issue in the Chicago area market. Note that while banks have a financial interest in the home, the homeowner is legally responsible.
- Waiver of personal liability – A short sale occurs because the sale proceeds from the home are less than (short of) what is needed to satisfy the mortgage balance. The sale of the home whether through a short sale or foreclosure leaves an unpaid balance (deficiency). Banks have the right to pursue collection of this remaining balance from the borrower for up to 7 years in Illinois. Generally, banks have not elected to pursue collection but in many cases they have. In addition, there are reports that some banks are going after these debts more often. In a short sale, the seller’s attorney negotiates a waiver of this personal liability.
- Credit Score – After a short sale, the debt is reported to the credit bureau as settled debt. Also, more often banks are not forcing homeowners to fall behind on payments before considering a short sale. This helps mitigate the impact to your credit score.
As seen, there are benefits to the homeowner to doing a short sale rather than just walking away from the home and choosing foreclosure. They can be a pain (not always) but they can be worth it nonetheless. Also, it should be noted that with price increases in the last couple of years, your home’s value may no longer be underwater.
If you are looking to buy or sell in the Chicago area market, give me a call. I can also answer any real estate questions you have about the value of your home or real estate in general.