General Short Sale Info
As a Short Sale Expert I Can Answer all of Questions

What is a short sale?

A short sale or a pre-foreclosure sale is a procedure in which the borrower is allowed to sell their property for an amount less than that which is owed in order to avoid foreclosure of a defaulted mortgage. Typically, this type of sale involves a property that has a value less than the amount the borrower owes on the property and the borrower has a long term, documented hardship.

How long does a short sale take?

A short sale takes anywhere from 30 days to several months, depending on the short sale negotiation. There are several factors that determine the length of a short sale.

Do I have to miss a payment to do a short sale?

Yes and No. We do not ever recommend missing payments, but lenders often times will ignore a customer who is current on their payments. A short sale is not a desirable solution for a lender as it means they are losing money, but it is generally a better alternative for them if it means they net more in the short sale than in a foreclosure. Without the threat of a foreclosure, lenders do not have much incentive to push a short sale through.

How can I do a short sale without hurting my credit?

We get this question frequently. It is almost impossible to conduct a short sale without hurting your credit. Since a hardship situation is a requirement for a short sale, it is assumed you will miss a payment just to get a short sale started. Missing a payment will definitely hurt your credit. A better question to ask your short sale professional is how can I do a short sale and minimize the affect on my credit. We certainly suggest you first speak with a credit counselor or lawyer before missing payments, but one option we have found that lenders are more accepting of is, as part of the short sale process the homeowner is willing to take on an unsecured note for the difference of the loan value and the short sale, sales price. Some lenders will show on your credit paid in full if you cover the difference. This is not possible for many distressed homeowners, but by minimizing the lenders losses they are more likely to keep your credit clean.

How does a short sale affect my credit as compared to a foreclosure?

This is an excellent question for a lawyer or credit counselor. We have done considerable research on how both affect a homeowner's credit and in both situations you will take a hit. In general we have found that a short sale is not nearly as bad as a foreclosure, but it does not mean that in the future creditors will be any more lenient on those who went through a short sale versus those who went through a foreclosure. A short sale often times comes through as a 'settled debt' on your credit report, whereas a foreclosure is more than likely to report to your account as "Derogatory"