How Long Does a Short Sale Take?
By Lars Tramilton
Overview
In real estate, short sales are when the lender will take less than the total amount due for the home. Short sales are alternatives to both foreclosure and bankruptcy, and are for people who cannot afford to make their mortgage payments anymore. However, not all mortgage lenders will accept discounted payoffs or short sales. Oftentimes, it seems to be more sensible just to foreclose on the house. Because of this factor, not all properties are eligible for short sales.
Benefits
There are several benefits to undergoing short sales rather than foreclosures. Short sales generally are a lot faster and don't take as much time as home foreclosures (though there is no set length of how long a short sale could take--it could be a few weeks or even a few months). They are also usually cheaper. Many people prefer short sales because it helps them avoid having a foreclosure on their credit reports.
Negatives
There are also disadvantages to short sales. Firstly, the mortgaged home is sold for a lower amount than the loan's outstanding balance. Also, a lot of short sales leave a deficiency balance and the borrower is still liable to pay that amount after the short sale is done.
Potential
There is a slight negative effect on a person's credit history after a short sale, but it is generally seen to be less problematic than having a foreclosure listed on a credit report. Short sales only stay on a person's credit report for seven years, compared to the 10 years that a foreclosure would remain. Also, after a short sale, a borrower can generally qualify for another mortgage between one and three years afterward.
Prevention/Solution
At the other end of the spectrum, for individuals who are considering purchasing a short sale property, there are some preparation steps to take that could be beneficial, including consulting with an accountant to talk about possible short sale tax ramifications and getting adequate legal counsel from a real estate lawyer.
Qualifications
In order to figure out if a property even qualifies to be put up for short sale, there are several criteria to be aware of, including the fact that the seller should presently be in financial difficulty, the market value of the property should have decreased and the mortgage should either be in or close to default status.
How Long Does a Short Sale Take? by empiremoneymaker.com