When it comes to selling your house on the market, everyone wants the best price possible. By selling your old property you probably intend to add on to the capital needed to purchase the new house, which offers every comfort you have always wanted. But for some property owners, selling their house might just be the way to avoid a complete foreclosure on their credit record!
Individuals, who have to meet debt payments and have no means of meeting the allocated deadline with the required amount of capital, have a choice. They can opt for the quick short sale of their home, thus avoiding any major negative effect on their credit score.
What Is A Short Sale?
Well, a short sale is different from a foreclosure as it involves the procedure of making a property sale at a price which is less than the amount owed as mortgage debt.
The house is sold at a price which is less than its original price, and also less than the total amount which is due to be paid to the creditors, including the complete cost of sales. All the creditors agree to take less than the total debt amount owed to them in a short sale.
The reason of opting for short sales is that the property owner is able to pay off a segment of their mortgage debts, and thus avoid a foreclosure of their property. While creditors have to agree to a debt payment, which is less than the owed amount, a short sale of the debtor’s property is all the option they have. If they object to getting less than the amount owed, it might result in them having to forego even the small compensation they are receiving from the short sale of the property. In case of avoiding short sale as an option, the creditors might have to settle with no hope of any debt payment, because the debtor is out of capital resources.
By choosing a short sale as an option for selling off the property, the seller can save his credit score from a major negative impact. Although a short sale also has an effect on the credit record of a seller, the resultant damage can be reduced to some degree if the property owner is able to convince his debtors to report the transaction as being paid in full to the credit reporting agencies.
That is why the short sale of a distressed property is by far, a very good and viable option for both the seller and their creditors. It is also a wise option for most buyers to purchase a good property at a low price, fix it up and sell it for a fair profit on the market. While the short sale procedure is long and complicated, many buyers who specialize in the purchase of distressed properties, are always on the lookout for a good estate which they can buy and earn a good profit from as a result.
That is why a short sale is a suitable choice for the debtor, lender as well as the property buyer.