A short sale will negatively affect your credit, but not nearly as much as a foreclosure or deed-in-lieu ~ read this entire article for details on each alternative.

A short sale simply means that the amount of the mortgage balance owed is greater than the current market value of your home. Homeowners who are in financial difficulties and facing foreclosure often opt for a short sale in order to escape the foreclosure process. This is precisely the situation now across the United States where the sub prime adjustable rate mortgage mess has caused mass foreclosures and significantly reduced the value of real estate.

A short sale takes place when the lender agrees to accept less than the amount you owe him on your mortgage because you don’t have enough equity to sell the home and pay all the costs of the sale. And make no mistake, the lender must agree or you’re out of luck.

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I'm 300K in debt. Gulp. I'm 24 and day traded away a fortune. Now I'm trying to crawl back to zero. Why not subscribe to my RSS feed and join me on this journey. You can also subscribe via e-mail. I appreciate tips and feedback! ~ DebtKid

Losing your home to foreclosure due to an inability to keep up with your monthly mortgage payments is one of life’s most unpleasant experiences. It is also an event that keeps on affecting you long after your home is history by devastating your credit score. Regrettably, most people cannot be 100% sure that they will remain safe from foreclosure because they can’t foresee the unexpected. Occurrences such as serious illness, a major accident, divorce or job loss can happen to anyone. So it’s a good idea to understand the available alternatives should the worst occur.

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Homeowners facing foreclosure often have the option of selecting a short sale or a deed-in-lieu of foreclosure as a possible solution to their financial difficulties. But are they? Which is the best choice? Like most alternatives, both have their upsides and their downsides. Understanding these options is the only way to make a truly informed decision. (more…)

A short sale negotiating service will work with your lender(s) or mortgage servicer to get approval to sell your home short.

If you are facing foreclosure, in default, and looking at a short sale, you’re probably getting lots and lots of junk mail. Having almost lost my home last year, I know it’s an emotionally draining process.

Having someone on your side, negotiating and working on your behalf can be lifesaving. For me, I had a short sale agent who handled 99% of the entire process. That left me sane, and able to focus on getting my finances back together.

Two Options When Hiring A Negotiating Service

There are two paths to go when you want to short sell your home.

1. Hire a real estate agent with short sale experience

This is what I did. I was able to find a real estate agent that had closed a number of short sales. He was able to negotiate on my behalf and made the process of doing a short sale as easy as possible on me.

You can read my post on how to find a short sale agent here

2. Hire a negotiating service

Whatever you do, don’t hire one person “loss mitigation” specialist. More likely than not, they are just looking to get your money. If I was going to hire a service, I would go with a large company like Home Assure.

These guys are able to help you with a short sale, or negotiate with your lender if you are able to workout a plan to keep your home. Either way, they have the expertise and the size to handle your situation. They will talk with your lender, so you don’t have too. I know they offer a free consultation, so it can’t hurt to check out this option.

It’s going to be OK

No matter what happens, it’s going to be OK. You’re taking action, and the sooner you get someone on your side, the better you will feel!

Good Luck!

—–>Check out my post on how I successfully short sold my house<-----

Until this year, there were definite tax consequences from escaping foreclosure through a short sale. Avoiding foreclosure has always been the best thing to do since it prevents a black mark on your credit report that might keep you from being approved for future loans. Most financial experts will tell you that even today, keeping a foreclosure off your credit report is more important than any added tax liability. (more…)

I keep getting e-mails from visitors to this blog asking for help with the short sale of their home. Here’s one from yesterday that illustrates the 3-4 e-mails I get a week:

Hi Debt kid,
I have a question for you do i have to pay for the commission out of my pocket or they just take it out from the sell when i do a short sell? And when you at it please send me some short sell agents for Some Random City, Florida.
thanks.
READER.

It’s not that I don’t want to help this person. I do. I just don’t have the time at the moment to ferret out an experienced agent in a random city in Florida.

Short Sale Real Estate Agents

If you are a real estate agent that has short sale experience, please leave a comment below (use a real e-mail). I am working on a more automated way to connect these people with experienced short sale agents and would love to have you in the database.

Thanks!

I’m not usually prone to commentating about the economy, or the sub-prime meltdown, or any of that stuff. But recently I’ve seen a very significant increase in short sale related traffic/e-mails to my little blog here. This is not good news. I wrote about this a few months ago, wondering if the surge of short sales was coming….It’s definitly here.

As more and more homeowners face foreclosure, many will hear about short selling their house, like I did. So will 2008 be the year of the short sale or the year of the foreclosure? I’m hoping for homeowners sake it will be the year of the short sale. Successfully completing the short sale on my house, and avoiding foreclosure was one of the highlights of my financial journey this year.

I wrote a “short sale advice” type post if you’re looking for advice and tips about short selling your home.

Countrywide is the largest mortgage company in the US…think they are dealing with a short sale problem at the moment? You betcha. (not to mention short sales of their stock! Wish I had shorted them at $40!)

Countrywide’s Full Spectrum Lending division was the King of awful sub prime mortgages the past few years, and now those loans are going bad. If you have a countrywide loan and are facing foreclosure, a short sale of your home might be your best option.

I did a short sale of my home (and I had a first and second mortgage on the property) earlier this year. It can be done, but it requires patience and a plan and a little help. There are a zillion schmucks out there who will offer to “help” you when your down. Some are legit, most are not.

What I Did In My Short Sale

What I did (hiring a real estate agent with short sale experience) worked for my situation. It may not for your short sale, but I found it the best option. Working with a real estate agent you at least can get a background on the person, and if they work for a larger brokerage you know they have resources to help you. Think short sales are hard for you? They are equally as hard on the real estate agent! Getting a short sale deal done (especially right now with the overwhelmed lenders like Countrywide) takes alot of work. I do think its the best option vs. foreclosure though. You can also read my 7 steps to a successful short sale guide.

I can’t ever complain that I have a boring life. Sure, I’m lonely at times, but that is 99% self inflicted. I’m working crazy hours, and have pushed many friends away because I just didn’t want to have to hide what was really going on in my life.

I should be able to change some of that starting next week.

First off, It looks like I’m getting a place to live. Like a real place to sleep, not just a camping pad in my office. Everything is lined up and approved, I just have to have my deposit and cashola ready by this weekend. How tight is it? It’s down to dollars. It may have been wise in terms of cash-flow issues to do another month in the office, but:

1. I’m starting to notice some health issues both emotionally and physically
2. I’ve spent a good deal of time looking at potential places, and the combo of being able to work form the place I’m getting is too good to pass on.
3. Living in your office officially blows.

So I am excited. I’ll be able to relax once I’ve got all my money together to get the place. But I’m still starting to get excited. It’s almost been two months now living in my office.

I’ve managed to lay low the last two months. A good number of people know I’ve been living in my office (I played it off well…), but my employees thankfully never noticed. I’ve never overslept (they come in around 9), and have not seemed to arouse any suspetions of any other tenants in the office. I could probably go another 10 months and no one would no the difference. Of course I would be withering mass of a man, going crazy from white walls and no windows 24 hours a day…but I’m just saying it could probably be done.

Debt Update

I need to do an updated spreadsheet with my current debt levels. I have been paying down a number of my business credit cards, as well as continuing to pay my mother monthly. My personal debts I have not been paying, nor could I with the dismal salary I can afford myself at the moment. Nor should I be if I still plan to file my chapter 7 bk as soon as I have the money for the fee (I do still plan to file, unless my income level changes dramatically in the next 30 days. Which is possible. But not likely)

In the last month or two I’ve noticed a dramatic increase in traffic to this site from people searching “short sale” and or “foreclosure” related terms. Looking at the search cloud image to the right shows this very dramatically.

Short Sale Traffic Surge…

I did a good amount of research before I decided to go forward with my short sale and from the traffic I’m seeing to the blog here, it seems like an increasing number of homeowners are beginning to research as well.

It’s a good and bad thing. Bad that people are upside in their homes (as I was). Good that they are looking to avoid foreclosure by doing a short sale of their home. Good also for the mortgage companies that typically stand to lose much more in a foreclosure then they will by doing a short sale.

When I closed the short sale of my home almost 2 months ago, it was a minor success for me. I avoided foreclosure, and sold a house that I had no way of affording anymore.

So, is a short sale wave coming? I think it is. I think the short sale is and will continue to become a much more common real estate transaction. The combination of bad loans and a declining real estate market has left too many homeowners in a lurch. Hopefully they can afford to downsize from their home, and short selling their home will give them a much better chance of getting an apartment than a foreclosure would. Neither is going to look great, but a short sale at least shows some proactive work on the borrowers side to remedy their situation.