Benefits of a Short Sale in Orlando
Benefits to Pursuing a Short Sale
Although it has dropped as of late, the rate of foreclosure is still fairly high here in Central Florida. More homeowners are opting to pursue a short sale instead of having to foreclose on their home. Our team knows quite a bit about short sales, and we’ve worked with several real estate professionals to negotiate solid deals for numerous homeowners in Orlando.
So how does a short sale work? The seller or a qualified real estate professional negotiates a price that the seller’s mortgage lender will accept. This price will be less than what is owed in home payments. Most agreements are sealed on terms that the lender will then release the homeowner from the remaining loan balance. This benefits both parties because:
- The homeowner isn’t forced into foreclosure
- The mortgage lender is saved the hassle of unloading the property through foreclosure
An Alternative Real Estate Strategy
Obviously, this would be considered an alternative strategy, but it does have its benefits— especially for homeowners who are predicting a severe drop in their property value. Unfortunately, we’ve seen this happen to plenty of homeowners as the housing market has continued to re-stabilize here in Orlando. Being knowledgeable of short sales really comes in handy if you find yourself owing more to your lender than the home is even worth.
No matter what the reason, sellers will need to negotiate a fair reduction of their loan balance with their mortgage lender. Once their demands have been met, they’ll agree to let the property be sold for less than what the homeowner still owes on the home. A successful short sale can benefit the seller in the following ways:
- It helps them avoid the excess hassles involved in any foreclosure process.
- It can help them retain some measure of dignity amongst their peers.
- It also can help them maintain their overall credit score which can be significantly undercut by foreclosure or bankruptcy.
What Happens Next?
If the short sale goes through successfully, the money will be used to pay off the balance on the home. Mortgage lenders than can decide if they are going to forfeit the remainder of the loan or hold the seller liable under the conditions of their mortgage loan agreement. Most choose to forgo pursuing this liability.
Given the expertise involved in conducting most short sales, we do recommend hiring a real estate professional if this is a route you’re considering. The bank must also agree to the sale before it can be finalized, although most are willing to accept this type of loss. It’s highly unlikely that a home will fetch a better price if it is foreclosed on and then auctioned off.
In summary, there are several reasons why you might want to consider pursuing a short sale under tight circumstances, including:
- Can earn anywhere from $3,000-$20,000 back from a short sale to use for relocation expenses, as part of the Making Home Affordable Plan.
- Your deficiency with the bank is often waived as well.
- Your credit score is saved from weathering a colossal blow.
- You won’t have to experience the psychological shock of being evicted from your home.
- Can often stay in your current residence for another 2 months without having to pay the mortgage.
If you have any other questions about short sales here in the Orlando Metro area, please feel free to contact us at (407) 702-4900.