What is a Short Sale?

A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. 

But to be technical, here's a more official definition:

  • A homeowner is 'short' when the amount owed on his/her property is higher than current market value.
  • A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.

 For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:

  • Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  • Monthly Income Shortfall – In other words: "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  • Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
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March 10 2012 - Austin
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Are you advertising?
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March 10 2012
Profile picture for sunnyview
Nice pitch, but too many agents encourage short sale without advising clients to get complete information from a local CPA and attorney.

Short sale is not a panacea, can have lasting effects on credit and may open up the homeowner to a deficiency judgement down the line depending on their state law. Encouraging short sale without encouraging a professional legal consultation FIRST is not right.
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March 10 2012
A Seller should always be presented with all available options and make a decision and/or consult with other professionals such as lawyers & accountants to come to an arrangement they're comfortable with. That's why I schedule options appointments and NOT listing appointments.
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March 12 2012
 
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