Joshua Jarvis - Georgia Realtor's Blog

Short Sales is the buzz word of 2009, but what is a short sale really?

Short Sale is simply when the bank agrees to accept less payment then what they are owed by the borrower.

Example:  John owes $250,000 on his 4 bedroom home.  The comparables suggest that he cannot sell it for more than $225,000.  The bank agrees to accept $225,000.

There are some things that come into play, particular the hardship of the owner.  So that begs the next question:  What is a Hardship?

A hardship would be anything that has caused the borrower not to be able to make the payments.

This could be anything from divorce or job loss to the rate adjusting.  It could also be that the borrower moved up into a larger home (or downsized) but never sold their old home.  Each case is dfferent. Here is a list of the top 10 Hardships.

The next question that comes up is Why would you short sale?  Why not try to do a Loan Modification or just let the bank have it back?

The "SHORT" answer is that Shorting a home affects the overall credit of a borrower less than foreclosure both in length of term (2 yrs vs 5yrs) and overall magnitude (although industry experts have differring opinions on how much).

Lastly, there are all sorts of information that is being given out about Short Sales.  Check the people out.  How many have they really closed?  Fannie Mae has some tips about the scams.

The key is, NEVER PAY ANYONE UPFRONT UNLESS YOU KNOW THE PERSON.