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Short sales have become very common and can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. A number of myths have developed about short sales and it is important to understand the reality of this process if you are going to be dealing with a short sale in any way. Myth #1 – The Bank Would Rather Foreclose than Bother with a Short Sale This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. In more cases than not, banks receive more on their investment through a short sale than a foreclosure. Myth #2 – You Must Be Behind on Your Mortgage to Negotiate a Short Sale While this may have previously been the case, today lenders are looking for verifiable hardship, monthly c...

As foreclosure rates continue to grow, more and more sellers are turning to short sales as a way to avoid foreclosure. Some of you may be thinking, "What is a short sale?" and "How does a short sale work?" In a short sale, the seller negotiates with their mortgage lender to accept a price that's less than the amount they owe on the property. As part of this arrangement, the lender typically agrees to forgive the rest of the loan. As a result, the seller doesn't have to go though a foreclosure, the buyer picks up a property at a discount, and the lender avoids taking on the burden of unloading the property. Sounds good right? Well, there are a few things that you should be aware of... Sellers need to be aware of the fact that a short sale may still damage their credit, though probably not as much as a foreclosure. Also, lenders typically will only agree to a short sale if the seller is behind in their payments and has received a default notice. There is a...