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Top 10 Short Sale Myths Exposed
Home Home Real Estate
By: Rich Griffiths Email Article
Word Count: 994 Digg it | it | Google it | StumbleUpon it


1. Banks don't like doing short sales

The fact is that all banks do short sales, some are easier to work with than others and some banks approve more short sales than others but regardless of how easy or hard they are to deal with banks have large departments set up to do nothing but handle short sales. So why do banks like doing short sales? Because of one reason only… it makes financial sense for their balance sheet and their shareholders. Banks are not in the business of owning property, there are in the business of lending money. Banks are required to set aside a loan loss reserve fund against their foreclosure assets. This is money that is not available to them to lend out to new borrowers. A short sale helps a bank to clean up its balance sheet and frees up money to lend.

2. A short sale will still hurt my credit so what's the point?

It's true that you will experience a drop in your credit rating following a short sale, however if you see yourself owning another home again in a couple of years then a short sale will definitely be beneficial. Under current Fannie Mae and Freddie Mac guidelines you will have to wait between 5 and 7 years to qualify for another mortgage. Following a short sale that wait will be as little as two years and in some cases maybe less. Foreclosures are reported twice on your credit report, once by the lender and once in the public records section, a foreclosure on your credit report will be there for at least 7 years.

3. Nobody wants to buy short sales

Finding a buyer that will not only make an offer but will stick around and see the process through is the Achilles Heel of the short sale process, this is why it's an advantage to use a real estate investment company that specializes in short sale negotiations. Not only will you have your buyer right away but also they will still be there at the finish line.

4. You Must Be Behind On Your Mortgage To Negotiate A Short Sale

While this may have previously been the case, today's lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency. If you meet these requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until you fall behind or receive a Notice Of Default before you take action.

5. I can't do a short sale because I have a second mortgage

A large percentage of the people we help have second mortgages or HELOCs. In this situation we have to negotiate with all parties. A second lien holder will only receive a small payoff but they realize that they will usually get nothing if the home goes to auction.

6. The auction date is in two weeks, there isn't enough time to negotiate

Once the bank sees a serious offer they will usually postpone the auction date, they know a short sale is there best chance to recover more of their losses. This is another advantage of working with an investor, an offer can be submitted right away, there's no waiting around trying to market the property and find a buyer before you can start talking to the bank.

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Rich Griffiths is an experienced real estate investor specializing in short sales in Las Vegas, Nevada. Through his investment company he is able to help homeowners get out from under their over leveraged properties Stop Las Vegas Foreclosure

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