Avoid Foreclosure Through a Short Sale

There is a good chance that you or someone you know is facing the possibility of foreclosure. Know that you are not alone and that there are ways to avoid this financial hardship! One of the best ways to avoid foreclosure is through a short sale.

As a real estate professional with a Certified Distressed Property Expert® (CDPE) and Pre-Foreclosure Specialist™ designations, I am able to work closely with you to identify your options and take the best course of action. Use these FAQs and resources to learn more about short sales, and contact us at 800.498.6707 or 805.208.2488 to discuss your options.

home that is foreclosed

Answers to Your Short Sale Questions

There is a lot of misinformation surrounding distressed properties, so we wanted to take the time to answer a few commonly asked questions. If you have a question that hasn't been answered below, please give us a call at 800.498.6707 or 805.208.2488.

If you're expecting to go through a foreclosure, it's important not to lose hope— it is by no means the end of the world! While foreclosures are not ideal, you can recover from them and move on with the rest of your life relatively quickly. By making the extra effort to pay smaller bills on time, and meeting with a credit counselor, you can repair your credit and be able to afford a home again in the future.

How Can I Avoid Foreclosure?

Fortunately, there are several ways that you can avoid a foreclosure; however, each option has its own benefits and downsides, so contact us if you want to know which option is best for your unique situation.

  • Short sale — after sale, you may qualify to purchase another home in 18 months
  • Bankruptcy — will delay a foreclosure, giving you time to find a buyer
  • Reinstatement — pay the total amount owed to date in one lump sum
  • Forbearance/repayment plan — increase your monthly payments to become current
  • Rent out the property — use income to make monthly payments
  • Loan modification — work with your lender to reduce payments
  • Refinance — only if credit is good and equity is substantial
  • Service Members Civil Relief Act — mortgage relief for military service members only
  • Deed In Lieu of Foreclosure — return property to the bank and vacate voluntarily

What is a "Short Sale"?

A homeowner is considered "short" when they owe more than their property is currently worth. In order to sell, the homeowner negotiates with the bank or mortgage company to accept less than the full value of the loan. Once a buyer closes on the property, the home is "sold short" of the total value of the mortgage.

The Difference Between a Foreclosure and a Short Sale

Short Sale Foreclosure
Less Significant Credit Score Impact Can Impact Credit For Up to 10 Years
Homeowner Sells the Property in Agreement with the Bank Bank Owns the Property and Sells to Recoup Cost
More like a Traditional Home Sale Processs Litigious and More Lengthy Process
May Not Have to be Reported in the Future Mandatory to Report on Future Loans

More Short Sale Information

This option allows you to sell your home and avoid many of the the detrimental credit effects of a foreclosure. If you or someone you know is considering a short sale to avoid a foreclosure, talk with us. We can help you identify the best possible solution.

What is the Short Sale Process?

While you may be overwhelmed at first, don't be intimidated by the Short Sale Process! Most banks would rather take a small loss on the property than directly be responsible for the sale themselves and take guaranteed loss with a long turn around time on the property, so the odds are in your favor! To get started on the Short Sale Process, follow these easy steps:
1. Contact a Short Sale Real Estate Agent Expert
Agents who are familiar with the process are invaluable to saving you time, money, and stress. Take advantage of their knowledge and expertise.
2. Get Your Property Evaluated
It's easier to convince the bank to allow a short sale when the home is worth close to the loan amount. If you are able to, do any repairs and easy fixes to increase property value before getting your home evaluated, simply to make the bank's decision easier.
3. Get a Hardship Letter
To give the okay with a short sale, your bank or lender will want to know why you can't continue to make payments on your mortgage. To satisfy this requirement, you need to craft a letter directly to the bank to explain the situation you are currently in. While short sales may be emotional in nature, try to keep your letter short and to the point, no matter if your payments are unable to be made from disability, divorce, or other unforeseen circumstance.
4. Fill Out A Short Sale Application
After crafting your letter explanation of why you need a short sale, you must contact your lender for a short sale application. You must fill out the actual lender application, as well as submit a financial package that includes detailed accounts of your bank statements that show you are absolutely unable to afford your current home. This can be a long process that may span over multiple interviews and months. If the lender chooses to accept your application, you will sign a contract to start the actual short sale process during this time. 

How do you know if you qualify for a short sale?

  • You cannot afford your mortgage and need to sell your home.
  • You owe more on your mortgage than your home is worth
  • You have a personal hardship that prevents you from being able to make payments on your home (unforeseen unemployment, divorce, death of a spouse and medical emergency)

What Qualifies As a Hardship?

Financial Hardship is defined by the IRS as: unforeseen unemployment, reduced income, medical emergency, job transfer, divorce, death, military intervention, incarceration, excessive debt, and unexpected home maintenance. 

Ask About Insolvency

If you're going through a short sale process, you may qualify for an insolvency tax exception. Filing insolvency allows you to avoid being taxed on the sale, which can be extremely beneficial if you're already going through a financial hardship that forced you into a short sale in the first place. Ask your agent if you qualify after selling your home.

I Want to Buy a Home

Purchasing a short sale is a great way to find your dream home for a lower price. Doug Ranger can help you find the property that fits your budget and your criteria. View all available short sales in Thousand Oaks, Westlake Village, and surrounding areas below. Contact us at 800.498.6707 or 805.208.2488 for a showing!

Browse Available Short Sales

I Need to Sell My Home

We can help you avoid the hardships of a foreclosure. If you are considering a short sale as a solution, contact us. We can evaluate your situation, identify the best possible options, and sell your home quickly and for as much money as possible.

Contact Doug Ranger

Questions? Just Ask!

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