3 Options for When Your House Fails to Sell – Short Sale vs. Foreclosure vs. Rental

If you have tried to sell your house but were unable to get the price that you need, then you may be wondering about your other options. In this article, we will explain what a short sale is, how it compares to a foreclosure, and take a look at the option of renting out your home. Finally, you will find out what you need to know in order to complete a successful short sale so you can move on with your life.

What is a Short Sale?

A short sale is when the sales price of the home is less than the balance owed on the mortgage. From the banks perspective, the payoff will be “short”, hence the name short sale. This requires the approval of the banks, who need to see two things in order to grant their approval of the short sale. First, they need to know that there’s not enough equity in the home to pay off the mortgage after paying the cost of sale. Second, they need to see that you have a hardship such as:

  • Unemployment or reduced income
  • Divorce
  • Medical emergency
  • Job transfer out of town
  • Bankruptcy
  • Death

You will need to prepare a financial package for submission to the bank. The bank must be convinced that you do not have the ability to pay the difference between what you owe and the value of the home.

Why would a bank choose to accept less than what they’re owed? Because it is preferable to the banks, in many cases, than going through the costly and time-consuming foreclosure process.

Short Sale vs. Foreclosure

Generally speaking, short sales are a lot better for the seller, and the neighborhood, than a foreclosure. Many people have recently needed to complete a short sale due to the sub-prime lending crisis and financial recession. Therefore, it is not as uncommon as it was in a healthy real estate market. Some might say it is just part of the “new reality”. Lenders are more understanding of a short sale in your credit history than they are of a foreclosure, where the borrower just gave up completely and let the home go to foreclosure. From a neighborhood perspective, owners that are doing a short sale usually continue to live in the home and maintain it. This is better for home values than a foreclosure where the property is abandoned and not properly maintained.

The Landlord Option

Another option is to rent your property out and wait for the home’s value to appreciate. You should at least find out the rental value of your home and compare that to your mortgage payment. If the rent is less, will you be able to make up the difference? What will you do if the tenant fails to pay on time, or completely fails to pay? Can you handle the cost of repairs, maintenance and vacancy?

Being a landlord can be a headache if you do not have the time and expertise to properly manage the property. Costly mistake could end up putting you in an even worse financial position. You should strongly consider using a professional property manager. If you have interest in investigating leasing or property management services, please give us a call at 703-485-4663 or visit our website, www.LintonHallRealtors.com .

The Short Sale Process

A short sale is a much more complex real estate transaction that a normal sale. In addition to negotiating with the buyer, you are also negotiating with the bank in order to get their approval of the deal. It is important that you have an experienced real estate team on your side in order to complete the sale, get the best financial outcome, and avoid unnecessary delays and frustrations. The Ashley Leigh Team has successfully negotiated over 1,000 short sale approvals since the recent market crash. Please give us a call at 703-485-4663 to discuss your particular situation.


About Ashley Leigh

Ashley Leigh is one of North America’s most productive residential Realtors of all time selling over 4,500 homes and over $2 Billion in sales in his 20 year career.  Ashley’s highest level sales performance has earned him mentions in The Wall Street Journal, Fortune Magazine, and The Washington Post.  Ashley continues to work full-time along with his local sales team.



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