A short sale, also known as a pre-foreclosure sale, happens when you sell your Nashville area home for less than your remaining mortgage balance. The proceeds of a short sale go to the lender.
Advantages of a Short Sale for the Lender
For the most part, lenders lose money when they foreclose on a property, so they'd rather not have to foreclose if it can be at all avoided. Selling a Nashville area home as a short sale is an opportunity for your lender to to cut their losses.
A short sale will usually allow the lender to recoup more of the cost of the loan than what the foreclosure process would result in.
Advantages of a Short Sale for the Seller?
The ideal scenario would be that you find a way to catch up on your mortgage payments and keep your home. However, for many people, that is not a realistic possibility, so it is in their best interest to take an "active role."
A short sale is a "pro-active attempt to resolve the problem," instead of simply hiding from your lender and hoping the issue will "go away" - or, worse, walking away from the property all together.
Accepting A Short Sale
That being said, selling your Nashville area home as a short sale isn't necessarily an easy task to accomplish. First of all, in order to get permission for a short sale, you must first provide documentation showing a genuine financial hardship taking place in your life.
Keep in mind that the lender is not required to do a short sale; it will be at the lender's discretion. The lender will take into consideration the source of your financial trouble, of which will need to be new, such as a health problem, the loss of a job, a divorce, etc.
The reason you're no longer able to afford your home should not be something problematic about your financial situation that you did not disclose when you originally applied for the loan.
Also, the decision for accepting a short sale isn't necessarily solely in the hands of the lender. The lender must first agree, but this is not the final word. If there's mortgage insurance involved, that company also has a say in the decision.
Additional Demands by the Lender
The transaction process for a short sale can be rather cumbersome, whether you’re on the buying or selling side. Many Nashville area short sales fail due to additional demands by the lender, such as requiring the broker to reduce his or her commission and/or that the seller signs a document requiring him or her to pay back the shortfall.
Why would your lender let you walk away from your home and forgive the shortfall on your loan? The answer: "to save time and money." Foreclosures are time-consuming and expensive for lenders. And once the lender realizes that a foreclosure is inevitable, a short sale may seem like "the lesser of two evils."
If you think your situation is ripe for selling your Nashville area home as a short sale, talk to a decision-maker at the bank about the possibility of this type of transaction. Don't just talk to a customer service representative, who is often more like a spokesperson and has no real authority.
Our team of experienced Nashville area real estate agents and professionals is 100% committed to providing exceptional, personalized service - and will work relentlessly to ensure that selling your Nashville area home is a positive and rewarding experience!
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