No likes losing their home because of a bank foreclosure. However, you can avoid this outcome and possibly save your credit score in the process by unloading your home in a short sale. Going this route can be challenging, but here are two tips for getting through it and successfully selling your home.
Ask for a Commitment
A short sale is a somewhat risky way to sell your home because you could end up in foreclosure court if the buyer bails on you at the last moment. Since it can take some time to get the short sale approved by the lender (and sometimes the court), the risk of a buyer backing out is high. Therefore, it's in your best interest to get the buyer to commit to the process in some way to ensure he or she is serious about purchasing the home.
For instance, you could get the buyer to agree in writing that they won't put in bids on any other homes while they're in the process of purchasing yours. Depending on where you live, you may be able to request earnest money to ensure the buyer is fully invested in obtaining the house.
This is where having a real estate agent helping you with the process can save you a lot of time and angst. The agent can screen buyers so that you only end up with someone who is serious about the home rather than a window shopper who won't commit.
Don't Forget to Address the Deficiency
When negotiating with the bank about selling the home in this manner, it's important you address the elephant in the room: how deficiency balances will be handled. If you are underwater on your home or you sell the home for less than the balance on your mortgage, you'll still owe the difference to the bank. If you don't negotiate it away, the bank can initiate collection actions against you to get the leftover balance paid.
Some states prohibit banks from trying to collect a deficiency balance. If you don't live in one of those states, your next option is to ask the bank to waive it. Most will do it since a short sale does save them a significant amount of money in litigation fees as well as time. However, some may require you to pay at least a small fraction of what's owed. For instance, you might have to pay at least 10 percent of the balance and the rest will be written off.
Addressing this issue ensures you can walk away from the home free and clear.
For assistance with selling your home, contact a real estate agent.