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Charleston Real Estate Law Blog

When should you consider a short sale?

You've been struggling to pay for your mortgage each month, and you're tired of living paycheck to paycheck. Your home isn't worth what you owe, and you don't want to keep paying. You're at a loss for how to get out of this fruitless situation.

A short sale is one possibility if you can't afford your home any longer but can't sell it for what you owe on your mortgage. A short sale is usually only an alternative if you can't refinance or modify your mortgage. You can also consider a short sale if you owe more on your home than it is worth.

South Carolina's commercial real estate market is booming

If you live in South Carolina and want to invest in commercial real estate, now may be the time. With a market that isn't seeing major increases in expenses but is seeing an influx of business, there hasn't been a better time to witness business growth since before the economic downturn.

The real estate market in South Carolina is in an economic boom, which is great news for developers and the economy. While some markets are still better than others, retail, office and industrial spaces are doing well. Vacancy rates have declined, and building has increased throughout the state.

Is buying a foreclosure a good option?

If you want to buy a home, one option open to you is purchasing a foreclosure. Foreclosures are not always a good buy, but if you find a home that is in good condition at the right price, you can find a good deal.

For those new to the market, start by getting a broker who is on your side. This person might know people at the banks or work with lenders who can give them information about new or upcoming foreclosures. Working closely with an agent can help you get first-pick when it comes to foreclosure properties in some cases. After you meet with the agent, you need to talk to the lender immediately, since this shows you're serious about making a purchase.

Short sales: Beneficial to all involved

Short sales can be beneficial for a person whose mortgage is underwater. The short sale helps the individual sell the home without taking a loss, and the mortgage company gets more money than if it were to sell the home as a foreclosure. The lender forgives any remaining balance on the loan, which helps the seller move forward without excessive debt.

Sellers who pursue a short sale are likely to suffer some damage to their credit scores, but the damage is not likely to be as bad as with a foreclosure. As a buyer, you're able to get a home at a reduced price. It's normal for short-sale homes to require some work, since the seller may not have wanted to put any money into a property that was already of negative value.

You can delay a foreclosure with one of a few options

If your home is going to be foreclosed on, the foreclosure begins with a Notice of Default. This lets you know that you have missed four payments. From the issuance of that notice, you'll have between six months and a year before the entire foreclosure is completed in most cases.

If you have a mortgage on your home, the lender must get permission from the court to pursue a foreclosure. The Notice of Default starts the official process. You'll receive a letter one month after the fourth missed payment. You can typically stop the foreclosure process if you can catch up what you owe in the next two to three months. If not, then the foreclosure process will continue.

Selling your home: How to get started and set the stage

When it's time to sell your home, you should know the steps. Following them makes selling your home easier and more efficient.

First, you should make sure you know when you want to sell your home. If you want to list it in three months, then you may want to start making lists and budgets. Collect important documents related to the home and add up your equity and remaining costs. The date you want to sell your home by determines the cost, so if you can list it early and give yourself more time to find a buyer at a higher price, that's better for you.

Alternatives to foreclosure give you other options

If you are falling behind on your mortgage payments and think the only solution is foreclosure, you may not be correct. There are actually many alternatives to foreclosure you can try before you lose your home in that manner. While foreclosure might be a good option for some situations, if you would like to keep your home or try to prevent a foreclosure from hitting your credit score, there are some alternatives to consider.

With a foreclosure, a lender takes possession of your home. One alternative to this is a short sale. A short sale is different because you still sell your home, but you only accept a fair market price. The lender must agree to this price. At that point, even if the offer is less than you owe, the lender accepts it and forgives any difference.

Short sales are not always the best choice for buyers

A short sale can save you a lot of trouble if you're behind on your mortgage and need to make a sale, but as a buyer, a short sale has the potential to cause you trouble. Short-sale buyers might get a good deal, but in reality, most don't. It's typical for a short-sale property to actually be less valuable than another home on the market, primarily because the mortgage holder will want to see the home purchased for current market rates. That leaves little room for profit if the buyer wants to sell the home later.

Short sales aren't discounts. If you're interested in properties that are deeply discounted, then a foreclosure may be a better option. A short-sale property is typically sold at the current market value, and it could potentially be sold for more than the current market value.

There are good alternatives to foreclosure available

There are many alternatives to foreclosure that you can consider before you decide if a foreclosure is right for you. In some cases, the alternatives can help you save your home or protect your credit score.

Not all alternatives are right for every circumstance, which is why it's a good idea to talk to your attorney about the options that are available. For some people, a foreclosure can be a good choice, but for others, these alternatives are a way out of debt that doesn't have as dire of consequences.

Short sales: These disadvantages can weigh a sale down

While there may be some advantages to buying a short sale, there are definitely disadvantages to doing so as well. Short sales can save you money, but the process is long and can be drawn out for many months.

If you're planning to purchase a short sale as an investment property or would like to buy a fairly priced home of your own through the short-sale process, here are a few things to know.

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