In this continuation from my last article about ways to stop foreclosure, we are going to take a look at two more options that homeowners have. These two options are selling your home to a “cash buyer” or investor, and selling your home through a short sale.

Selling your home to a cash buyer…

If your property is worth more than the amount owed to your lender, a sale to a cash buyer can help you avoid foreclosure and all the hassles involved with the long drawn out foreclosure process. Cash buyers are usually real estate investors who will buy your house in an "as is" condition, and you can sometimes negotiate a move out date with such a buyer, giving you time to find a new place to live. There are non investors out there who will pay cash for your home, but from my experience they are far and few between.

The foreclosure process is halted as soon as the title to your home is transferred and the lender is paid off, which means your credit score will not be as badly affected. This is only an option if you have equity available in the property. For homeowners who have to work with a deadline in mind, selling a house for cash can provide the reliability and certainty that you require which in turn minimizes the stress and worry usually involved with the selling process.

Selling a property using a Realtor can take time, which leaves you guessing as to the closing date. While selling a property at auction usually results in a sale, the price you get is almost always much less than the market value. By selling your house to a cash buyer you get the certainty of knowing when the sale will be and the certainty of knowing exactly how much money you will receive.

Selling through a short sale…

A short sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance of the loan, due to an economic or financial hardship on the part of the borrower (you). The negotiations are all done through communication with the lender's loss mitigation department.  Your property is sold for less than the outstanding balance of the loan, and you in turngive all proceeds of the sale to the lender in full satisfaction of your debt, in most cases. 

There are a number of different circumstances that influence whether your lender will discount a loan balance or not. These circumstances are usually related to the current real estate market and your financial situation. If your local market has experienced a downturn in home prices and sales, the bank is much more apt to approve a short sale. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing.

For the home owner, the advantages include avoiding having a foreclosure on their credit history and the partial control of the lender's right to seek a deficiency judgement. Additionally, a short sale is typically faster and less expensive than a foreclosure. A short sale is nothing more than negotiating with lien holders, a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate.

Certain conditions must be satisfied in order to qualify for a short sale. The property must be owner-occupied, you must be 31 days delinquent or be able to prove financial hardship is imminent, and you must provide documentation of a reduction in income or an increase in living expense.

Both of these methods will stop the foreclosure process, but you need to keep in mind the benefits and drawbacks of each of them. Do your research, talk to professionals in the real estate industry and take your time if you can.

My next article will examine bankruptcy and foreclosures, an often misunderstood arena, even by lawyers! Until then…