What is a 'Short House Sale'?
When faced with economic and financial difficulties, homeowners can often find it hard to pay back loans and keep up with mortgage repayments. When times get hard, repossession is often the last resort, but it may be wiser decision to consider a 'short sale'.
'Short sale' describes the process of selling your home and passing the proceeds of the sale onto your lender. This will result in a shortfall (or 'deficiency') where the proceeds from the sale do not match what is owed. In a short sale situation the lender agrees to accept the proceeds of the sale as payment and releases the seller from the debt (assuming this is what has been agreed beforehand).
Short sale homes generally have less negative repercussions on the debtors credit score, as he manages to avoid a lengthy repossession and delayed repayments. A home is sold in a short sale and the sale amount is paid back to the lender, although it will be discounted from the original value. Once the payment has been made to the lender, the loan is treated as paid, and the lender forgives the rest of the amount.
In a repossession, the bank or lender repossesses the entire property and sells it themselves, severely impacting the credit score of the buyer, as the loan is considered unpaid. To be on the safe side, a homeowner should always check the necessary paperwork, instead of relying on word of mouth to understand his options.
How does a 'short sale' work?
If you owe more than you can repay, a short sale may be a good solution. Once the property owner makes the sale, he transfers the sale money to the lender. Here is some useful short sale information for the UK:
While short sales are not a legally defined term, they are possible in the UK and will largely depend on the financial institution. It is also advisable to ask the lender about the procedures involved. Some may work with you to reduce the amount owed, while others will help you by making alternate arrangements. They may also look towards agents and other stakeholders to see if they are willing to make any concessions for the sale, reducing the monetary burden on you. Short sales are definitely the better alternative for homeowners, as it enables them to repay their loans - even if they are discounted.
Short sale is a viable option for some people who are faced with repossession, but it isn't the only option. Fast property purchasing companies, like Fast Sale Today specialise in making offer on, an purchasing properties quickly.
Our process can result in an offer on your house in a matter of hours, and the purchase of the property can be completed in as little as 28-days. This can be a great solution for some sellers, so if you think it could be suitable for you why not get in touch with our team of experts to find out more?