First, what is a Short Sale?
A Short Sale in real estate is an asking price for a property less than the actual amount due on the current owner's mortgage.
What is a Foreclosure?
Foreclosure is when a borrower cannot pay back their debt, a lender may legally seize and sell a home or other asset.
If you find this topic relatable, please continue watching this video.
So, what is the difference between a short sale and foreclosure?
Both are when you cannot pay your mortgage, and you may also be upside down on the mortgage.
A good example would be:
You owe $500,000, and the property can only sell for $400,000.
So there's a $100,000 difference.
FORECLOSURE
A foreclosure can be a tragic or devastating thing for your credit or even in your emotions, your everything. Just bad! 😱
What happens if that's the case?
The bank will take the property back as collateral to them and make you promise to pay.
A mortgage represents that loan:
Bank perspective - the mortgage is an asset
Seller perspective - the mortgage is a liability
If you stop paying the bank, they'll become a non-performing asset, and then they need to take the collateral back at some point.
When they do that, it will significantly affect your credit for the next several years. Also, remember that $100,000 difference?
The bank still has the right to go after you for that $100,000 at any time.
SHORT SALE
Here's the difference - You find a SHORT SALE specialist, you place your property in the market, and you can manage the time.
By the way, remember that $100,000 difference?
When we find that buyer, and the SHORT SALE specialist helps to negotiate that deficiency, then that $100,000 either goes away or you will be able to negotiate that to something that makes sense to you.
To conclude:
The homeowner voluntarily consents to a short sale. However, they require approval from the lender. Any issues due to the lender are the responsibility of the homeowners who use Short Sales.
Foreclosures are when the homeowner cannot avoid foreclosure. The lender files a lawsuit to take ownership of the property and sell it.
So, if you're a homeowner in Northern Virginia right now and are interested in creating wealth, I'd love to talk with you and show you the exact techniques I'm doing.
And you can hit me up at 📧: Dan@greetingsvirginia.com. You can also shoot me a message here at 📱:703-346-2776.
Just send me a text. I'll respond and love to be able to have a conversation with you to share the techniques that I'm using to generate wealth the same way that you can.
Our Team:
Dan Rochon
John Root
Zainab Fahim
John Turner
Talk to you soon.
P.S. You may also want to check our active listing here.
If you're interested to learn more about Real Estate Investing or tips and strategies about Real Estate, you can reach me at 703-346-2776 or send me an email at Dan@greetingsvirginia.com. We will be more than happy to help you.
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