A short sale is a real estate sales transaction in which the lender allows the property securing a mortgage to be sold for less than the existing loan balance, usually due to the borrower’s financial condition, the property’s condition, market conditions, or a combination of the three. In short (no pun intended), the lender accepts a payoff that is less than the amount owed on the property.
For example, if you own a home that was purchased for $450,000, and it’s now only worth $250,000, the lender would allow you to sell the home for $250,000 (and usually accept the $250,000 as payment in full).
What’s the lender’s motivation for accepting a lower payoff?
- The distress level of the homeowner (catastrophic illness, death of a spouse and loss of income, job transfer, etc.).
- The distress level of the property (has the property’s value decreased to an amount that’s below the loan balance due
to local and national economic conditions that are beyond the homeowner’s control?) - What’s in the best interest of the bank? Is it more cost effective for the bank to approve a short sale or foreclose? Because of unknown factors (and banks avoid unknowns) such as vandalism, unanticipated repairs, mold or foundation problems, an unpredictable number of days on the market, etc., in the vast majority of cases the lender finds that a Short Sale makes more sense economically.
Do I Qualify for a Short Sale?
To learn much more about Short Sales, order our FREE Ebook, Foreclosure Alternatives: A Guide for California Homeowners (the order form appears at the top of this page).
Are there tax or other consequences I should be aware of before considering a Short Sale as an option?
Yes. To learn much more about Short Sales, order our FREE Ebook, Foreclosure Alternatives: A Guide for California Homeowners (the order form appears at the top of this page).
Is it possible to close a Short Sale and purchase another home immediately.
Yes! In a limited number of circumstances. To learn much more about Short Sales, order our FREE Ebook, Foreclosure Alternatives: A Guide for California Homeowners (the order form appears at the top of this page).
