when convincing a lender to agree to a short sale the homeowner must be able to cite a new source of financial difficulty not something that was withheld at the time the mortgage was approved 
short sale vs foreclosurea short sale or foreclosure are two possible outcomes for homeowners who are behind on their mortgage payments own a home that is underwater or both in either case the owner is forced to part with the home but the timeline and consequences are different in a foreclosure the lender seizes the home after the borrower fails to make payments unlike a short sale a foreclosure is initiated by the lender alone foreclosure is the last option for the lender in such cases the lender repossesses the home hoping to eventually make good on its investment in the mortgage unlike in most short sales many foreclosures take place after the homeowner abandons the home if the occupants are still in the home they are evicted by the lender once the lender has access to the home it orders an appraisal and puts it up for sale foreclosures normally take less time to complete because the lender wants to liquidate the asset quickly foreclosed homes may even be auctioned off at a public trustee sale depending on the circumstances homeowners who experience foreclosure have to wait for two to seven years to purchase another home a foreclosure is kept on a person s credit report for seven years a distressed homeowner generally gets to stay in the home during the short sale process a homeowner who has gone through a short sale may with certain restrictions be eligible to purchase another home immediately while a foreclosure essentially lets you walk away from your home albeit with grave consequences for your financial future such as having to declare bankruptcy and destroying your credit completing a short sale is labor intensive however the payoff for the extra work involved in a short sale may be worth it less drastic alternatives to a short sale include loan modification or the use of private mortgage insurance short sale alternativesbefore resigning yourself to a short sale talk to your lender about the possibility of a revised payment plan or loan modification one of these options might allow you to stay in your home and get back on your feet obtaining a loan modification may temporarily lower your credit score as will any application for new credit another possible option for staying in your home may be available if you have private mortgage insurance pmi many homeowners who purchased homes with less than 20 down were required to purchase pmi with their homes if the pmi company thinks you have a chance to recover from your current financial situation it may advance funds to your lender to bring your payments up to date eventually you ll have to repay the advance the short sale processseveral steps are necessary to pull off a short sale before beginning the process struggling homeowners should consider how likely it is that the lender will agree to work with them on a short sale the lender is not required to cooperate the source of the financial trouble should be new such as a health problem the loss of a job or a divorce rather than something that was not disclosed when the homebuyer originally applied for the loan the lender won t be sympathetic to a dishonest borrower however if you feel you were a victim of predatory lending practices you may be able to talk the lender into a short sale even if you have not had any major financial catastrophes since purchasing the home to put yourself in a more convincing position stop purchasing non necessities you don t want to look irresponsible to the lender when it reviews your proposal be aware of other circumstances that may prevent the approval of a short sale if you are not in default on your mortgage payments yet the lender probably won t be willing to work with you if the lender thinks it can get more money from foreclosing on your home than from allowing a short sale it may not allow one if someone cosigned the mortgage the lender may hold that person responsible for payment rather than doing a short sale 1if you think your situation is ripe for a short sale talk to a decision maker at the bank about the possibility don t just speak to a customer service representative immediately ask to speak with the lender s loss mitigation department if you don t like what the first decision maker says try talking to another one on another day and see if you get a different answer if the lender is willing to consider a short sale you re ready to move forward with creating the short sale proposal and finding a buyer you may want to consult with an attorney a tax professional and a real estate agent while these are high priced professional services if you try to handle a complex short sale transaction yourself you may find yourself in even bigger financial trouble you may be able to pay for these service fees out of the sale proceeds from your home professionals accustomed to dealing with short sale transactions will be able to give you guidance on how to pay them new rules for the national association of realtors expected to take effect in july2024 may lower commissions for home buyers and sellers if a federal courtapproves the changes the standard 6 commission ends and sellers no longerhave to propose compensation to prospective buyers and their agents nar willalso require brokers to enter into written agreements with their buyers to helpconsumers understand what services will be provided and at what cost 3