St George Short Sale vs. Foreclosure
Posted by Paula Smith on Saturday, March 12th, 2011 at 9:56am.Short Sale vs. Foreclosure - Understand Your Options Before Taking Action
There are several differences between a St George Utah short sale and a foreclosure. Washington County homeowners who find they are having difficulty meeting their monthly mortgage payments should be careful to understand these differences before taking action. Discussing the options with their mortgage company, scheduling a meeting with a real estate consultant, and learning what potential taxable and credit report consequences may be from a tax professional or attorney, are all important facets to understand before making a decision. Let's first look at the definition of these terms:
What is a Short Sale? - A Short Sale is when a lender agrees to accept less than what a homeowner owes on a mortgage. In a short sale, the home is listed by the owner and sold however the actual (final) purchase price must be approved by the lender.
What is a Foreclosure? - A Foreclosure is when the homeowner stops making monthly mortgage payments and the bank takes legal action against the homeowner and the deed of the home returns to the lender. In a foreclosure, the deed is transferred to the bank in a legal action; the home is now sold by the bank, sometimes called "REO" on the MLS.
Now that we know the difference, let's take a look at the specifics of the short sale and a foreclosure:
A St. George short sale provides the home owner the opportunity to put the home on the market at or near market value even if more than the market value is owed on the property. When the home is offered for sale, it must be advertised and marketed with verbiage such as “short sale” and “all contracts must be approved by bank.” This informs potential buyers that the seller cannot finalize any offer without approval from the mortgage holder. In some cases, the bank will wait until several offers have been received before making a decision as to which one, if any, to accept. The reason for this is so the bank can be sure to accept the highest offer, thereby receiving the most money back on their initial investment. Short sales often take weeks or even months to complete, so they are not desirable for St. George real estate buyers who are looking to move within a particular time frame.
The reason a bank will even consider a short sale is because oftentimes they will retain more of the money owed them as opposed to going through a costly foreclosure. The foreclosure procedure is expensive for banks as they include attorney fees, court fees, REALTOR fees, and tax expenses. Often it is simply more cost effective for them to accept the short sale.
St George and Hurricane homeowners who are considering either of these options should also consult a real estate professional, a tax specialist, and perhaps a tax attorney. There are real estate professionals who specialize in short sales. They can provide additional information, such as the current market value of the home, the potential for it to sell at a specific price, and how long it will take to receive an offer. They will also be able to manage the short sale transaction, assisting the homeowner with forms, communication and anything else required of the bank. In addition, a tax specialist or tax attorney will be able to provide advice on any potential taxable consequences the homeowner may be responsible for in either a short sale or a foreclosure.
When determining what is best for a particular situation, short sale vs. foreclosure, consult the professionals, discuss options with the mortgage holder, and understand what it will take to be successful in either case. Contact Paula Smith of RE/MAX First Realty in St. George Utah for a confidential discussion regarding your options if you are in a situation where you are in jeopardy of losing your home. Here is a link to all MLS Listed St George Utah Short Sale Homes and another for all MLS listed St George Utah Foreclosure property for sale. Also, if you would like to read monthly St George real estate statistics and market conditions report, visit my blog. Here, I offer actual sold numbers and my opinions and perspective on our St George real estate market.
Thank you for reading, and share your thoughts below in the comment section. If you want other reports, just ask! Paula Smith Re/Max First Realty www.StGeorgeUTproperty.com
"Dedicated to providing an unprecedented level of service and exceed Client expectations" Contact Paula Smith today if I can be of assistance.
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