Short Sale FAQ
Florida Short Sale FAQ
What is a Short Sale?
A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank’s Loss Mitigation Department.
Do short sales really work?
It depends who you ask. Short sales work for us because we have the education, patience and experience necessary for a successful short sale.
Are your agents Certified Distressed Property Experts (CDPE)?
Yes, we have CDPEs on staff to assist with your transaction.
What are the benefits of a short sale?
There are many benefits to a short sale including.
- Provides the means for the homeowner to avoid foreclosure.
- The lender avoids adding another foreclosure to its already large inventory of bank owned properties (REO).
- The neighborhood avoids another vacant and run down property, helping other homeowners to maintain the value of their homes.
- The real estate agents get paid commissions and are able to maintain and grow their businesses.
- The end-buyer of the property gets a good buy, often purchasing the property for less than market value.
- The lender to the end-buyer gets to close a good loan with less exposure and instant equity due to the value to the buyer.
How does a short sale affect my credit?
We do not pretend to totally understand credit reporting and how a short sale will affect your credit and/or FICO score. The credit reporting agencies are all different in how they approach a person’s credit and how they arrive at your credit score is somewhat of a mystery. However, all lenders have to follow strict guidelines on how they report to the credit agencies. For more information please visit the Federal Trade Commission’s page on the Fair Credit Reporting Act (http://www.ftc.gov/os/statutes/fcrajump.shtm). It is our understanding that most lenders will report a short sale as something like “Account settled for less than full balance” and it is likely to affect your credit somehow. The good news is that some lenders have options for you once your short sale is complete and you are more likely to be able to get a new home loan in a shorter period of time with a short sale in contrast to foreclosure sale. Fannie Mae guidelines have recently been updated (https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf) to include pre-foreclosure (short sale) and the time to re-establish credit for short sale is only 2 years versus 5 or more years for foreclosure. You also have the right to dispute any credit reporting and to make a personal credit statement on your credit report, so we recommend that you start tracking your credit right away and throughout your entire short sale process to make sure everything is being reported fairly.