With short sales making up almost 35% of home sales in March and the country with a national foreclosure problem, I Short Sale, Inc., one of the largest short sale firms in the U.S., sets the record straight on common short sale myths.
1. You must be default on your mortgage to negotiate a short sale. Short sales are not a function of default status on a mortgage. They are the result of the bank mitigating a potential default situation that, in the long run, will cost more money to the investors. We have completed many short sales in instances when the borrower was not in a default situation.
2. Listing my home as a short sale is embarrassing. Anytime we get ourselves into a tough financial situation it can cause some embarrassing feelings. It is important to remember that those feelings will not help us get back onto stable financial ground. We need to overcome our feelings and do what is right to protect our financial futures.
3. Buyers aren't interested in short sale properties. Short Sale properties are often times available at a competitive price to other properties on the market. In many cases, short sale properties are very well cared for and have not had to endure the deferred maintenance of a REO property. Short Sale properties are in great demand in the marketplace.
4. There's not enough time to negotiate a short sale before foreclosure. A good negotiator takes into account the timeline affiliated with a foreclosure. There is always a chance that a short sale can be negotiated. However, the only way to know for sure is to try.
5. The bank would rather foreclose than complete a short sale. Banks do not want to foreclose on property. It is expensive and carries a high level of liability once the bank owns that property as an REO. Wherever possible, banks are seeking other loss mitigation options before foreclosure.
6. Short sales are impossible and never get approved. Short sales are complicated, but not impossible. We negotiate short sale approvals every day.