A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on the loan secured by the property sold.

In a short sale, the bank or mortgage lender agrees to discount the loan balance because of an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank’s loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan and turns over the proceeds of the sale to the lender. In such instances the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower’s financial situation.

A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economical way for the bank to recover the amount owed on the property. Often, a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as they are carrying costs associated with a foreclosure.

Foreclosure is expensive for a mortgage lender. Mortgage lenders are not in the business of foreclosing on houses. Banks and lenders are in the business of making loans. They don’t want the house back. This is a business decision for the lender so it must make rational, logical sense.

As a buyer, how would a short sale help me? A short sale can allow you to buy a house at below market value, though that is not always the case. Negotiations with the bank can take some time, so be patient especially if you are looking for a good price.

In order to help you buy or sell a short sale, we can:

• We can facilitate the short sale process for you
• Get your home ready for the market
• Market your home for the best possible price in the current market conditions
• Negotiate with the buyer and keep you informed all the way
• Serve as your advocate and representative when dealing with buyers, buyer’s agents, and service providers
• Help you establish a fair asking price that also meets your goals
• Screen all written offers and discuss their advantages and disadvantages
• Assist you in making counter offers
• Represent you at closing and mediate any last minute obstacles to ensure a smooth, successful transaction

Let us know if you need more information about foreclosures, short sales or getting your home on the market.