Facing foreclosure or a short sale? Learn the difference and discover a faster, stress-free way to sell your home with Camarotti Homes.
Short sale and foreclosure may sound like foreign words for some, but for homeowners, it’s their worst nightmare.
After all, who would want to lose their home? These terms refer to more than just losing a property—they signify the potential need to sell my house under immense pressure and represent a significant financial and emotional burden.
A short sale is when you sell your home fast to avoid foreclosure after falling behind on mortgage payments after experiencing financial difficulties due but not limited to divorce, a natural disaster, a death in the family, or losing their work, which made them unable to make future payments. In short, a short sale is your final attempt to prevent foreclosure.
However, before you sell your home fast, it’s important to remember that the lender holding the mortgage must authorize a short sale. So, just because you want to list your property as a short sale doesn't necessarily mean that the lender is required to accept it.
A short sale is tricky, especially if you want to sell your home in Florida. However, understanding the process can help you sell your home fast and be aware of any possible difficulties you might face.
While it’s easy to think that just because you’re the owner means that you get to decide whether you want to list your home as a short sale to sell your home, since it concerns the money of the lender, you still need to inform the lender and ask permission to have your property undergo a short sale.
So, before attempting to sell your house as-is willy-nilly, assess first the likelihood of your lender allowing for the short sale. After all, the lender isn't mandated to cooperate on any short sale you want.
After testing the waters on the likelihood that your lender will approve your short sale, it's now time to gather all the documents you might need to prove that you’re unable to pay your mortgage anymore due to your current circumstances.
These documents vary depending on each person's circumstances. Still, generally, you can include your bank statements, a notice of termination, medical bills, and even your divorce decree—anything that can prove that you cannot pay for the mortgage anymore, showing the necessity of a short sale.
After preparing your documents, the next step if you want to sell your home in Florida is to prepare the house. You can list your home just like any other property on the market. Still, the only difference is that you must inform Florida homebuyers that the property is subject to a short sale approval process, which might take several months.
If you want to sell your home, you should consider seeking help from a real estate agent to help you with the listing.
Finding Florida homebuyers can be tricky, especially since you still need the lender to accept the short sale. However, a buyer will sign a sales contract to buy the home once they are interested. Even if the buyer and seller agree on the conditions, the contract is not official until the lender has approved it.
Once you have Florida homebuyers interested and all the necessary paperwork on hand, your next step should be submitting everything to the bank.
Aside from the buyer’s asking price and proposal, you should also include a letter explaining everything that happened and why you couldn't pay your mortgage on time, emphasizing your current financial difficulties to meet ends. This is because you appeal to the bank and persuade them of your financial circumstances.
While having thoughts like “I want to sell my house” might seem enough for you to have a short sale, for a lender to consider a short sale for your property, you need to have actual financial difficulties that would enable you to pay the mortgage anymore.
Hence, a short sale should be considered if you're a homeowner who has experienced a life-changing event leaving you in a difficult financial situation. If the property you want to sell is less than the outstanding mortgage balance, your property could potentially lead to foreclosure if not for that short sale.
Foreclosure is when the lender-bank takes possession of the property because of the non-payment of the homeowner for at least 90 days or three months. Here, what the homeowner was trying to prevent by initiating a short sale has already happened.
While generally, most properties set for foreclosure are already abandoned, if the homeowner is still residing in the house, they will be evicted from the premises to start the foreclosure proceedings.
To recoup as much of the loan amount as possible, the lender sells the house at auction or through a real estate agent. Because the lender wants to liquidate the home—that is, transform it into cash—as soon as possible, foreclosure usually takes less time than a short sale.
Each state has laws that govern foreclosures, including the notices that a lender must post publicly, the homeowner’s options for bringing the loan current and avoiding foreclosure, and the timeline and process for selling the property.
While it's easy to think that the lender forecloses your property without informing you, everything starts with a notice of default. It may begin foreclosure proceedings if you fail to catch up on payments.
Once the lender confirms that you indeed paid to catch up on payments despite the notice of default and demand letters, they will file a foreclosure complaint. Although you can respond to the lawsuit again, if the court finds that the foreclosure is proper, your house will be subjected to an auction.
Once the lender obtains a favorable decision from the court, they will sell your house as-is in a public auction where the highest bidder is awarded the ownership of the property.
After they officially sell your home in Florida, the new owner, whether the lender or a third party, files a notice for eviction if you still reside in the property and are then required to leave the premises.
Aside from the lender-bank getting ownership of your home and getting evicted from the property, other consequences can affect you if you’re faced with a foreclosure proceeding.
A foreclosure under your name can severely impact your credit score by up to 160 points, and this mark remains there for 7 years, which can be troublesome, especially if you want to secure loans.
It will also be difficult for you to get a mortgage in the future. Once the lender or bank sees that you've been involved in a foreclosure proceeding, they'll be less likely to accept your application since, in their head, you're likely to default in payments again.
The lender also has the option to seek a deficiency judgment, which entitles them to sue you for the outstanding balance if the foreclosure sale cannot pay off the entire mortgage.
Depending on the regulations in your state, this may result in asset seizure or wage garnishment. If you're at risk of foreclosure, looking into options like a short sale or loan modification is essential because these outcomes can have long-term effects on your finances and personal life.
A short sale is the best option since you can voluntarily sell your home while receiving less severe consequences than foreclosure.
As a short sale is the last attempt to avoid foreclosure, foreclosure is the worst possible outcome for any homeowner because not only will it severely affect your credit score, but you'll also have to wait for another 7 years before banks will start allowing you to get another mortgage not only that but you also have the chance of getting evicted when faced with foreclosure proceedings.
Additionally, because it enables them to recover as much of the original debt as possible without going through an expensive legal process, most lenders would rather have a short sale than a foreclosure.
Most of the time, a lender would want to sell the house through a short sale before pursuing a foreclosure. However, a lender may reject the idea of a short sale if it believes that foreclosing on a home will allow it to recoup more of its investment.
Foreclosures aren't easy to overcome, but luckily, there are various ways to avoid them. One is when you sell your house as-is with a trusted real estate company like Camarotti Homes. At Camarotti Homes, we understand the urgency and offer a simple, stress-free solution.
So, no matter what your problem is—whether it's to avoid foreclosure or want a start to a new life, we're here, set, and ready to buy your house.
We buy ugly houses and provide fair, cash offers with no hidden fees. Since we buy houses for cash, you won't have to worry about checks bouncing back or taking back offers. You can close in at least seven days, ensuring a fast and efficient process.
Contact us today and stop worrying about how you want to "sell my house" and sell your house as-is.
No effort needed, no hidden fees. Receive cash and a fresh start in just 7 days.
