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Consider Short-Selling Your Home

According to RealtyTrac, there were nearly three times the number of short sales as there were foreclosed homes in 2012.

The numbers show that across the nation, foreclosures made up 11% of all sales. Short sales comprised 32% of all home sales, according to CNNMoney.

If short sales are so common, how easy are they? And what does the process involve?

A short sale and a foreclosure are two different things. A foreclosure is when the bank takes possession of your home. In a foreclosure sale, the bank tries to sell it.

In a short sale, however, the homeowner is still selling the home.

The difference between a short sale and a regular sale is that in a short sale, the house is sold for less than it's otherwise worth.

Here's how a short sale works. The first step is to contact the bank and let them know of your intention to short sell your home. They might come back and try to give you a loan modification. But if you're set on short-selling your home, then a loan modification won't help.

In order to have a successful short sale, you need to look at comparable prices in your area and then hire a realtor. The realtor will list the house on the market and bring in the buyers.

When you have a good buyer, you then submit the offer to the bank, along with all the necessary paperwork the bank asks for, in order to approve your short sale.

The bank may ask for your financials, and will usually ask for a hardship letter. While it might seem wise to have this letter drafted by an attorney, the little-known fact is that these letters work better when drafted by hand (i.e., in your own handwriting).

If the bank approves the short sale, then the sale closes and you move out.

The bank may ask for a higher sale price from the buyer or a lump sum amount from the seller. This is not uncommon.

A short sale does affect your credit but you'll be back in the game in no time, if you watch your finances and make your payments regularly.

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