The New Exit Strategy

Foreclosures are becoming a daily story with friends and their family's losing their homes and all the equity that they have built up for years and years. After investigating short selling I came across an interesting article that suggests that short selling is a better option to take than foreclosing your house.

As we discussed in our lecture today, "in a short sale, the lender allows the property to be sold for less than the total amount due on the loan. In some cases, the lender forgives the remaining debt." So you are probably thinking why this is such a good idea? You are still losing a lot of your equity.

There are several advantages to doing a short sell as opposed to a foreclosure. The first and probably the most important, a short sell is much less detrimental to your credit record than compared to a foreclosure. Short selling also takes much less time and is much less expensive than a foreclosure.

Now you are probably thinking if short selling is so much more advantageous, why is everyone not doing it instead of foreclosures? Well, there are also several negative aspects to a short sell. The first obstacle that you as the homeowner would have to overcome is finding a real estate agent that will work for much less commission than in normal circumstances. Secondly, you would have to convince a lender to short sell a property, which could be very difficult. Also, once you have convinced the lender to engage in a short sell, the amount that the lender forgives is also taxable by the government.

Even though short selling is the clear choice over foreclosures, it is till the best idea to try and work out late payments with your lender and avoid putting yourself in the situation where you would have to choose between a foreclosure or a short sale on your home.

http://www.tucsoncitizen.com/daily/local/42927.php

http://real-estate.lawyers.com/residential-real-estate/Selling-Your-Home-For-Less-Than-You-Owe.html