What is the Difference Between a Foreclosure and a Short Sale?
If your financial situation prevents you from keeping your house, you may be looking at getting rid of the property. Two options are going through foreclosure or attempting a short sale. While neither option is favorable, you need to choose the best option based on your current situation. Before you decide which route to take, you need to understand the difference between a foreclosure and a short sale.
You also need to explore other alternatives that may help you avoid a short sale or foreclosure altogether. For instance, you can sell your house as-is for cash to a local home buyer in the DMV area. A cash sale can help you unload the property and save your credit at the same time. Below, we look at the difference between a foreclosure and a short sale and what you can do to avoid either.
What is Foreclosure?
Foreclosure occurs when you fail to pay your mortgage payments and the lender or mortgage investor must repossess the home. Foreclosure can also happen when you fail to pay your property taxes or homeowners association fees. During foreclosure, the mortgage lender may seize the property and sell it to recoup the money it lost from the mortgage default.
The lender can take back the home because a mortgage is a secured loan. That means you guarantee repayment by providing collateral. If they can't pay back the loan with money, they use the collateral instead. In the case of a mortgage, the home is used as collateral and, upon signing closing documents, you recognize that the lender has the right to foreclose on the home if they default on the loan. This is also known as putting a lien on the title of the home. Once the mortgage is paid off, this lien on the title of the home is removed.
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What is a Short Sale?
A short sale in real estate is when you sell your property for less than the amount due on the mortgage. The buyer is a third party, and all proceeds from the sale go to the lender. The lender either forgives the difference or gets a deficiency judgment against you, requiring you to pay the lender all or part of the difference between the sale price and the original value of the mortgage.
In some states like Washington, D.C., Virginia, or Maryland, this difference must legally be forgiven in a short sale. Before a short sale can begin, the lender must sign off on the decision to execute a short sale, also known as a pre-foreclosure sale. Additionally, the lender needs documentation that explains why a short sale makes sense. No short sale may occur without lender approval.
Should You Choose a Short Sale Over a Foreclosure?
The easiest decision to make when facing losing your home is to throw your hands up and let the bank foreclose on the property. However, it's not always the smartest decision. A foreclosure can destroy your credit, making it difficult for you to get a loan. Plus, the bank may still hold you liable for any balance left over after the house sells at auction.
The main advantage of a short sale is that you're in control of the sale. Your home sale will be handled like any other home sale, and you may prefer being involved in the selling process and knowing who is buying your home. There is also a negative social stigma that comes with foreclosure. Many people find it embarrassing and want to avoid the process by any means.
How to Avoid a Foreclosure in 3 Easy StepsIf you are looking to avoid foreclosure or a short sale, you may want to sell your house to a local home buyer in the DMV area. You can sell your house fast for cash in three easy steps.
How to Sell My House Fast in DMV
Step 1: Schedule a Visit with a Local House Buyer
The first step is to pick up the phone and call one of our local home buyers in the Alexandria, Virginia, area. Simply schedule a quick walkthrough of the property. There is no need to make any renovations, prepare the house to show, or even clean up. We are happy to view the property as-is.
Step 2: Let Us Make a Fast Cash Offer
If we decide we want to move forward with buying the property, we'll make a competitive cash offer based on a percentage of the house's value. We can negotiate a fair cash offer that puts money in your pocket and allows us to make a good investment.
Step 3: We Pay You Cash
Do you like the offer? Then schedule a closing date that works for you. We show up, sign the papers, and pay all closing costs and fees. You pay nothing. We can pay cash in as little as seven days after closing.
The Benefits of Selling Your House for Cash
Today, the real estate market is unreliable at best. There are no guarantees that you will sell your house, get the asking price you want, or make a profit after paying closing costs, realtor commissions, and repair costs. There are several reasons why selling your house for cash is a better option:
- You pay no closing costs, realtor commissions, or other fees.
- There is no reason to renovate, repair, or prepare your house.
- You can avoid listing or showing your house to potential buyers.
- Choose your closing date without waiting.
- We buy your house as-is – don't bother cleaning it.
- You work with a local house buyer in the DMV area.
- We make a fair, competitive offer just under your house's market value.
With all the benefits of selling your house for cash, you owe it to yourself to explore it as an option. Let us take your property off your hands. You walk away free and clear with no strings attached.
Sell Your House for Cash in DMV
Do you live in Washington, D.C., Maryland, or Virginia? If so, contact Fortune Homes today. Sell your house fast for cash in the DMV and the surrounding area. We buy houses as-is in any condition. Call 202-918-9600 to schedule a quick, no-obligation visit with one of our local cash home buyers.