Short Sales and Foreclosures Explained

By Monte Mohr

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Our examples this week might come from Brentwood TN Real Estate, but buying or selling a house can be very confusing in any area in Nashville. Especially right now with terms like foreclosure and short sale flying around, but it can be a whole lot easier if you have a professional realtor to help you.

A short sale is when we convince the bank to take less for the house than what is actually owed on the home. I read yesterday that 3.5 million people are 90 days or longer behind on their mortgage payment. So it is an issue that is really prevalent out there and people need to go ahead and face that reality if that's their situation.

A foreclosure is not what you want to experience. A foreclosure is when the bank takes ownership of the property. There's a big difference in the ramifications of a short sale vs. a foreclosure as far as your credit is concerned. A short sale will only affect your credit for about 18 months to 2 years. Where as a foreclosure we are looking at as much as ten years that you can't buy another home and your credit score is affected by 200 points.

If a homeowner is looking at this bleak financial situation and trying to make a decision of what's best for them. How do they know?

Well, anybody that can see themselves not being able to make their payments in the next short term will qualify for a short sale as far as most banks are concerned. What they absolutely do not want to do is just walk away from the home or the situation and pretend that it doesn't exist because eventually (it takes about 6 months to a year) but eventually that bank will foreclose on the property.

If you're on the flip side of that and you're looking to buy a house, is it a good time to kind of be looking out for those situations because you can get a good deal?

It really is, it's a great time to buy a home. Unfortunately on the other side, it's a lousy time to sell. But it is a great time to buy a home. Ya know, everything's on sale out there right now.

Well, what we've recognized is that homes are selling out there, but only if they're priced correctly. And the best thing you can do to get your house sold is to position your sales price so it's more competitive with the banks and the short sales going on there.

Again, homes are selling out there but they have to be priced correctly if your focus is Franklin TN Real Estate. Price is the biggest issue that anybody can address out there, and by lowering their price that much, we are able to give people an advantage in the marketplace that others may not have.