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Foreclosure vs. Short Sale – What’s the Difference?

1/7/2016

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Whether you’re a buyer or a borrower / seller, a short sale and foreclosure each present different advantages and difficulties.

What Is A Foreclosure In Prince Georges County MD?

In simple terms… “Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.”.  If you stop making your house payments… your lender has the right to foreclose on your property so they can attempt to recoup their money that was lent to you. 

A home is typically foreclosed on when a borrower fails to make mortgage payments. The lending institution assumes ownership and possession of the property, evicting the borrower. These properties are then sold at auction or more traditional means utilizing the service of real estate agents. A foreclosure can damage the credit rating of a borrower, and make it very difficult to obtain a mortgage for many years.

Depending on the state that you live in… a foreclosure can work in different ways. Check out the foreclosure process information at the U.S. Department of Housing and Urban Development (HUD) Government website.

What Is A Short Sale?

In a short sale, the home is still owned by the borrower. The definition of a short sale is… “A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt”.

In some cases, a short sale is an option agreed upon by borrowers and lenders. In a short sale, the home is sold for less than the outstanding balance of the mortgage. The unpaid balance (known as the deficiency) may or may not be forgiven (still be owed by the borrower).

This option typically takes some time, as a few different lending institutions may own the mortgage. All parties who have a stake in the property must agree to the terms of the sale, and a potential deal could fall through if even one lender doesn’t agree.

Short Sale vs. Foreclosure – Your OptionsWhile both options can have ramifications, a short sale often has less of an impact on the borrowers creditworthiness. A foreclosure could impact a borrower’s credit score by 300 or more points, where a short sale may only dent the credit score by 100 points.
Borrowers who are foreclosed on are often ineligible to purchase another home for 5-7 years with a traditional mortgage, where under certain circumstances, a short sale borrower can purchase immediately.

As many Americans struggle with an economy that has yet to completely recover from the 2008 crash, folks are having a hard time making monthly mortgage payments. Choosing between being foreclosed and initiating a short sale (or a 3rd option…  selling your Prince Georges County house fast) is an easy choice for a borrower having troubles paying their mortgage on time.

Sometimes, lenders are willing to work with borrowers to complete a short sale, to avoid the fees and time consuming process of conducting a foreclosure.
Our suggestion is always this.
  1. Talk with your lender and discuss ways that they can work with you on your loan. We offer this service where we can help guide you in the right direction if you run into issues with your lender… just reach out to us on our Contact page and we’ll discuss your situation.
  2. Attempt a short sale or other program your lender may have that forgives part of your loan, creates a new / more affordable monthly payment so you can get back on your feet, etc.
  3. If the bank isn’t willing to work with you very much… your best option may be to sell your house. Work with a local real estate house buyer service like WE BUY SOUTHERN MD HOMES to sell your house fast for an all-cash offer. If you’re interested we can look at your situation and make you a fair offer on your house within 24 hours. Just fill out the form on our website at the bottom.
  4. Foreclosure. Last resort is to let the house fall into foreclosure. This is the worst possible scenario. It’ll harm your credit and you could still be left with money owed to the bank even after the foreclosure is finished.
By knowing your options, you may be able to dodge a significant impact to your credit score, allowing you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so if you have the opportunity, a short sale can be the better option.
Have a pending foreclosure?  We’d like to make you a fair all-cash offer on your house.
Give us a call anytime at (240) 412-2372 or
Fill out the form on this website today!


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How To Sell Your Inherited Property

12/21/2015

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My inheritance includes a house I can’t possibly keep…what do I do?


There are number of answers to this question. One of the most common ways people acquire houses is through inheritance. The simple answer is to sell it, but the process of selling isn’t always simple.

• It’s usually not just one person’s house. It is often passed on to siblings.

• As soon as people inherit a house, they get all the expenses that go with it.
Once the house you inherit is yours, you inherit the bills for repairs, property taxes and anything else that go with it. Those costs don’t go away until the house is sold. There are a lot of reasons people can’t sell their house fast when it’s inherited.

• The house is ugly. That nasty shingle siding dad never replaced is now yours!

• That shag carpet left over from the 1970s is still there, and no buyer will set foot inside until it’s gone!

• Those outdated bathrooms are driving buyer after buyer away!

If you ask a traditional real estate agent, you’ll be told to upgrade or fix things before they will sell it. So you wait for the buyer to pick a contractor-that’s if you’re lucky enough to get a buyer on the hook, or you have to pay up front for the work-and that is never, ever cheap. You can’t take any chances, or you’ll be stuck with the house that much longer.

If you’re a person whose inheritance includes a house, you could sell the house as-is, which means you’ll sell for less than ideal market price, but that’s not the problem. The problem with selling a house as-is through a real estate agent is that you’ll still have to pay a sizable commission and also pay closing costs even as you’re not getting top dollar. Plus, the transaction through a traditional broker always takes a long time.

If you’re looking to sell your house fast then fill out the form below, TODAY!
I’d like to make an offer on that inherited house. Don’t forget that you won’t have to make any repairs, pay any fees, or real estate commissions. What that means to you is approximately $8,000+ in  savings.



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