A short sale is a way to avoid foreclosure by asking the bank to take less for your home than what is owed on it. A lender might agree to this to rid itself of a non-performing asset – your home – even if it means taking an immediate, short term loss. Your individual situation will determine if a short sale is a good option for you and whether or not your bank or lender will agree. Laws do vary from state to state so be careful. Your successful short sale depends on many things, especially: how many liens are on your property, how far under water you are, are your lenders willing to work with you, and can you write an effective hardship letter?

If you only have one lien holder, you stand a better chance of success because any one lien holder can prevent a short sale by refusing to agree to negotiate a reduction in their payoff! With too many liens on your property you have a much more complicated situation and you’ll be jumping through a lot more short sale hoops. If you’re short on time, perhaps a short sale is not the answer for you.

If you are too far under water in your equity to value ratio, that’s also a drawback because the banks just don’t have the same incentive as a seller to take less than what they want. Remember, they are at no risk for being homeless. Banks usually have preset limits on loss they’re allowed to take, but do ask anyway!

This is very important! Short sale agreements don’t always release borrowers from their obligation to repay deficiencies and you could still wind up owing your lenders money, even after your home is sold! Remember to negotiate a judgment without a deficiency! For more information about how to negotiate without deficiency, please contact us at openoffer.com.

With a well-written, personalized hardship letter included in your short sale package to your lenders you stand a better chance of obtaining a judgment without a deficiency and thereby not owing anything other than normal fees after the deal is done. It could still go as a strike on your credit though, depending on how your lenders report your short sale, but don’t give up!

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