Profile picture for Rcarroll12

what is a short sale and how does it work

  • July 31 2010 - Ridgeville
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Answers (8)

Profile picture for natewolf
Short Sale.

You are paying less for the house than the owner owes the bank.

You are "shorting" the bank the amount they are owed.

Example: You go to McDonalds and the menu says you owe $5 for a Combo. You are only willing to pay $3 for the Combo. The manager (banker) decides that he's okay with selling you a Combo for $3 and accepts your shortage as full payment.

In the same way, a seller owes $500,000 to the bank. You are only willing to pay $300,000 to the bank. The bank manager is willing to accept your $300,000 payment as full payment even though they are being shorted (paid less than they are owed). And they accept that they are out (short) the other $200,000.

If this was helpful, give me a "THUMBS UP" or "BEST ANSWER". Thanks!
  • August 30 2010
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Hello, you are getting a lot of good answers to your question. the most important is for you to contact a real estate that has a SFR or a CDPE designation. They have been trained to assist in short sales.  There are many people in the same situation and it is something you can work our of but it will take you 2 to 4 years to recover your credit standing.
  • August 03 2010
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A short sale is a situation where the seller owes more on his house than a willing and able buyer would pay for it.

Short sales often look like a great deal because they are listed at market value. Prices of many re-sell homes are inflated right now because so many sellers are under water or can't accept that their house is worth less than they think.

When an offer is made on a short sale, it is negotiated like any other sale; buyer and seller must come to an agreement on price and terms. Once that happens the offer must be approved by the seller's mortgage company in order to close.

Waiting on the seller's mortgage company to approve the sale can be difficult. Buyers lose interest; sellers panic.

The seller's mortgage company will give you anywhere from 10-30 days to close the sale once they've approved it. Buyer needs to be ready to spring into action with inspections and financing to meet the deadlines set by the seller's mortgage company.

If you can be patient and flexible, short sales can be a great way for buyers to take advantage of what this market has to offer, and they give sellers an alternative to foreclosure. Good luck!
  • August 03 2010
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Profile picture for Pacita Dimacali
There are so many resources for information.

You can go to REALTOR.com for an index and links to information

You can also check out the Complete Short Sale Process

Whether you're a buyer or a seller, be prepared for a long process (unless the lender is Wachovia who is the speediest of them all)

If you are a seller, and you are underwater on your mortgage, and you want to stay and keep  you home, it is often recommended that you try for a loan modification. But if your applications for a modification is rejected, you should consider doing a short sale. Although your credit is going to take a hit, it will not be quite as devastating as a foreclosure, strategic default (where one simply walks away), or bankruptcy.

Like all else, whichever option you choose or is left to do --- check with your real estate attorney and CPA to determine the long-lasting effects and ramifications.

If you are a buyer,  you should prepare for a long wait....but patience has its rewards in the sense that short sales are generally sold at less than market value, so you may be able to find a really good deal.

Good luck!
  • August 01 2010
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Profile picture for Mr Caveat
whenever a realtor on this site says "contact a realtor" that is universally a code for "talk to a realtor in a more neutral zone where we can lie....uh... speak freely"
  • July 31 2010
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Contact a local realtor to get the scoop on Short Sales. Make sure they have done some short sale transactions as you may end up with a rookie. Good Luck!
  • July 31 2010
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Profile picture for Coleen Wessel
a short sale is the process in which a home owner goes about selling their home when they owe more than it worth. In 99.9 % of the cases, the owner ( home must be your primary residence) must have a hardship to qualify with the lender ie: loss of job or income, health issue, death, or divorce. 
The lender agrees to allow owner to sell at market value and takes a loss on the home.  The seller and lender must agree to the price and buyer.  Once the process is complete in most states, the lender cannot come back at you for the  difference between owed and sold /  or the loss.  There are some tax implications in some states.  There is a hit on your credit for 2 - 3 years. But this is a far better choice than a foreclosure.  
The good new about Short Sales is that Obama has designated X amount of money to fund this program and there is a way to access a counselor direct that can walk you through the qualification process and even talk directly to your lender while you are on the phone.  It is the best program the government has funded so far and it is free.  Need more info??? email me and I will give you the 
phone # . 
  • July 31 2010
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Profile picture for ABBAUSA

A Short is not short, it is short of paying off the mortgage in full.
The lender is agreeing to take less than the full amount owed.
The lender usually acts very slow and deliberately.
The buyer can make a good deal if they have the patience to see it through.

The lender gets rid of the property without going to foreclosure.
The lender receives a small fee for accepting a short sale.
The seller gets out of the property and can receive up to $3000 to relocate
(this funds are to relocate not profit or return of equity).

It is one way to purchase a home, but it does not always go like you plan.

Contact a Realtor© who is well versed in Short Sales and Go For It!

Good Luck!

James Callas - Realtor®
  • July 31 2010
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