Over the past couple of months through presenting at agents and consumer seminars I have been consistently asked some of the same questions as they pertain to short sales. Most of these are “myths” or misconceptions. For the greater good, I have put together the ten most untrue myths I have been asked about in the last couple of months, through emails and at seminars. Most information is questions asked by consumers, but is great information for agents as well.
2. A short sale and foreclosure really damage your credit.(True for a Foreclosure/False for a short sale)
3. There are no options to avoid foreclosure.(False)
Now more than ever there are options to avoid foreclosure. Besides a short sale, loan modifications, along with deed in lieu are also options. In most cases (but not all) a short sale is the best option. Either way, there are more options today than there have ever been to avoid foreclosure.
4. Banks do not want to participate in a short sale, or it is to hard qualify to be accepted for a short sale.(False)
5. Short sales are not that common.(false)
6. The short sale process is too difficult and they often get denied.(False)
7. Short sales cost money. (False)
8. If I am behind on my payments, I can perform a short sale any time.(False)
The farther you get behind on your payments, the harder it is to get a short sale approved. The closer a property gets to a foreclosure the harder it is to convince the bank to perform a short sale. The closer to a foreclosure the more money they spend, thus deterring them from doing a short sale. If you think you need to perform a short sale, time is of the essence; the sooner you start the process the better. Waiting to long can trigger the ramifications of having the short sale denied.
9. I can perform a short sale by myself without a Realtor.(True, But good luck!)( this is sometimes what a bank will tell you)
10. I was denied for a loan modification, so I know I will get denied for a short sale (False).
A short sale and loan modification are two separate departments at the bank. These processes are totally different in approval and denial. If you got denied for a modification you still can perform a short sale, in some cases you can get a short sale approved faster than a loan modification.