Before you decide to list your property for sale, you must first determine if a short sale is right for you. In other words, is this truly the best option for you at this time? To get to this answer, it is important to know the WHY behind your decision to go through with a short sale. No one else can conclude this but you. The reasons for someone doing a short sale can be many – avoiding the stigma of a foreclosure, credit preservation, ability to negotiate deficiency demands with the bank prior to foreclosure, neighborhood preservation, etc ... but the specific reasons are yours alone.
In addition to knowing why you want to do a short sale, it is also important to understand what other options are available to you in your particular situation. Other options may be renting your home, settling or consolidating other debt, getting a second job, working a loan modification with your lender, filing bankruptcy, or letting the home go to foreclosure. It is important to understand ALL options available to you, in order to make the right decision.
While there are many resources for each of those options available on the internet, we strongly recommend that you have a conversation with a local professional experienced in each of the fields (attorneys, accountants, HUD counselors, bank counselors, etc). A true professional immersed in their field will have all the right resources, and can recommend other reputable professionals to you. Please remember that a real estate professional is not qualified to provide you legal, financial/tax or credit advice, so it is important that you get your questions in these areas addressed as well.
Some common options many sellers evaluate are “Short Sale vs. Foreclosure,” or “Short Sale vs. Staying,” or “Short Sale vs. Renting.” The most frequent scenario we encounter is the “Short Sale vs. Foreclosure” decision. It is important to understand that ultimately this is exactly how your bank will view your short sale as well – an alternative to foreclosure. And remember, once you have stopped making payments on your loan you are on a path to foreclosure.
During a short sale the bank will ask about the nature of your hardship, and ask to see supporting documents (to include, but not limited to, recent bank statement, tax return, paycheck stubs, etc). Hardship is a very relative concept, but the most common definition that we use is that something has changed, and you are no longer able to keep making the payments to the bank. Does this describe you? Are you able to avoid foreclosure through another means? Or is a short sale your best option?
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