When does it make sense to do a short sale if the bank isn't cooperating? What I mean by that is the bank being stubborn on the price. Is the bank refusing to do the sale unless you sign a deficiency?
Let me explain this a little bit. When you sell your Metro Detroit home via a short sale there is two choices for the bank to make. They can forgive the deficiency and give you a letter releasing you from any liability from the deficiency. Or they can refuse to give you a letter.
If the bank refuses to release you from the liability, you are possibly responsible for the deficiency. Then it may be smart NOT TO DO A SHORT SALE. Now this is just my opinion. Why would you go through the whole hassle of doing a short sale if the bank can come back after you for the deficiency? The only reason I can see to do a short sale versus a foreclosure, is if you can keep your credit in tack and the bank won't report the short sale on your credit report.
From what I have been told is if you can get through a short sale without getting behind on your mortgage payments it is a good thing. Better for your credit report than if you had 90 day lates on your credit report. But nobody knows for sure how badly a short sale affects your credit report. It depends on whether you have late payments or not.
But my opinion is that if you are going to be responsible for the deficiency it is better off to let the home go into foreclosure. Then you are through with the home.... very seldom do banks go after people that have lost their home in foreclosure.
Now let me say this. You need to seek legal advice from a real estate attorney before you make these choices. You should also talk to your CPA or the person that does your taxes. You need to know all three of these aspects:
- Your possible legal liability
- Your future financial liability / ability to get back on the right financial path
- What this will do to credit / can you survive with bad credit for three to seven years?
Don't go on my opinion alone. Get all professional advice from those who specialize in those fields. They are better to guide you on what to do. But it is your decision alone. Choose carefully.
More Michigan home selling tips
Feel free to contact me if you make a decision to sell your home as a short sale. I will be glad to help you get it sold.
Russ Ravary
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My quote of the day:
Most people who succeed in the face of seemingly impossible conditions are people who simply don't know how to quit.
Robert Schuller
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My Month of April quote:
"Sometimes the only way to get to the far shore is to lose sight of the shore you just left"
Russ Ravary
"helping make your move easier"
your local Metro Detroit Realtor helping clients like you sell and buy homes through out the entire Metro Detroit suburbs. I love showing and selling Oakland County and Livingston County Lake front homes too.
