As home prices continue to drop in the state of Massachusetts, the increasing number of loan delinquencies has been steadily on the rise during the past few years. A lot of homeowners today realize that what they owe is actually more than what their homes’ worth. As a result, foreclosures in Massachusetts are on a surge to a level that the average American homeowner is not prepared to handle.

One of the solutions that are being offered to these homeowners is the “short sale.” A short sale is actually selling the mortgaged property with the consent of the lender at a price that is lower than its mortgaged value. This is done to avoid all other problems that come with a foreclosure. Although they do not keep even a dime of the sale, homeowners are spared from having a bad credit report.  A homeowner may lose around 250 or even up to 280 points on their credit score in a foreclosure; whereas in a short sale it would only cost them around 80 to 100 points. It’s kind of a reputation saver.

Lenders are sometimes forced to agree with this settlement, rather than incur greater costs that come with a foreclosure. Although the sale needs their approval, they are not totally in control of the situation especially in some states where they are not allowed to run after defaulted homeowners.

A short sale is being viewed as a lifesaver for homeowners.  It takes careful and thorough research and analysis before anyone can engage in it. It actually takes a greater amount of time to seal the deal on a short sale than it does any regular real estate transaction. A short sale also tends to be more complicated when it comes to technical aspects of the sale.

Having convinced the lender to approve a short sale, the sale requires strict scrutiny from an accountant, a real estate agent, and a real estate attorney. You also need the assistance of a real estate broker to assess the property value, which is known as a BPO or broker price opinion. Finding a buyer is another story. A third party specialist can assist you in the process of a short sale.

With a lot of properties nearing foreclosure in the state of Massachusetts, buyers are scarce and it’s forcing prices to go even lower. Buyers are increasingly becoming conscious of short sales and are becoming more and more skeptical when entering into these kinds of deals. The longer the time spent in hunting for the right buyer, means mounting amortization and sends the price of your property to the bottom. This makes the process even more frustrating.

Another trend that makes a short sale a difficult move is private mortgage insurance. While it’s true that lenders lose a lot of money in a foreclosure, chances are, they can recover it through payouts from private mortgage insurance. When this is the case, it becomes virtually impossible to convince a lender to agree to a short sale. They would rather choose to foreclose so they can evade all the bottlenecks in a short sale.

Because of these un-welcomed surprises when entering into a short sale, most homeowners in Massachusetts are now seeking ways to keep their homes instead of loosing them to foreclosure or short sale.  One of the best options today is ‘loan modification.’ Instead of selling a property at a loss, Massachusetts homeowners can put in a request for long-term adjustments in their loans. This way, they are provided with a better option to ease the burden of paying for their homes. Either way if you want to sell your house on a short sale, short refinance, negotiate forbearance or modify your loan, expert assistance should be sought for this type of loan servicing to ensure its success. Remember you only have one shot at working out a deal with your lender.  If you mess up the first time there are no second chances.