Short Sale, Real Estate, Foreclosed Homes in Denver

In the wake of the mortgage meltdown, many and many Americans are now facing the real threats of foreclosure. Losing ownership of one’s home not only destroys your credit but also degrades and embarrasses the whole family. However, Americans have found a way to avoid it. They have discovered ‘short sales’ in real estate. It is usually done on stocks and other finance-related transactions but now it has increasingly become popular to avoid the more negative setbacks of foreclosure.

A short sale is a transaction where the seller is selling the house for a price less than the balance of debts incurred from acquiring the house. This is usually done to avoid foreclosures. A short sale is usually a better option than foreclosures but it’s neither easier to process. Not all lenders though may accept short sales and not all properties nor sellers can qualify for short sales. Although, it can be a win-win situation for both parties, one for sellers which prevents their house from being foreclosed which has more negative ramifications than short sale transactions. They could also go back to homeownership if they want. Also, saves time and money for lenders than having it foreclosed which takes years to process. Beneficial for buyers too because they could get the house for a discounted rate, although, it could have some drawbacks. To be sure they should ask for legal advice from experts and ask accountants of some tax ramifications in doing short sale process.

Even if short sales are much more preferred now than foreclosures, it doesn’t mean it is any more convenient and hassle-free than foreclosures. It has also negative ramifications. Let’s just say that it is considered as the ‘lesser evil’ if compared to a foreclosure. For the owners or sellers, it could mean an overall drop in their credit score of up to 200-300 points. This is according to Elizabeth Weintraub of About.com. The home-owners, because of their credit standing, may find it difficult to acquire a new mortgage because of their short sale history. The lender or bank may reject and prohibit them from doing so.

Reported in CNBC last 2010, that according to Jeremy Brandt, an entrepreneur, some creditors have been accused of engaging in fraud during the short sale transaction. One type of fraud is that some of the creditors have, allegedly, obtained kickbacks from buyers or real estate agents which were not disclosed to the other creditors.

It’s very unfortunate for the homeowners to face these tough choices but in order to survive the crisis, you gotta do what you gotta do. All of which have negative impacts on one’s credit risk. If you want to make a choice you must understand all the risks and legalities involved with short sale transactions. Ask for the advice of those who know better and focus on your goal to end the pain, accept the consequences, learn from the experience, move on with your life, and most importantly rebuild your credit standing through positive financial education.