Home Buying in Houston>Question Details

Thelma Houns…, Real Estate Pro in Oxford, OH

What are the elements of a short sale. Who pays the deficit between the sale price and the price actually onwed ont he property?

Asked by Thelma Hounshell, Oxford, OH Tue Feb 8, 2011

friend may be doing ashort inorder to sell property.

Help the community by answering this question:


It truly depends on the lender and the circumstances of the borrower. You also need to know if the loan is a recourse or non-recourse loan. Although Texas is a non-recourse state lenders still have rights to potentially come after the borrower for the deficiency amount.

I am currently working directly with lenders like Chase and Bank of America. I have had my clients request to be approved for HAFA which is the Home Affordable Foreclosure Alternative. This is where the lender tries to do a modification. In the case of my clients they were not approved. Because we ran them through the program the lender is not going to try to get deficiency monies from them after their home sells in the short sale transaction.

Remember every short sale is different. Some lenders are more willing to work with you than others.

Don Groff
REALTOR | Mortgage Broker
Keller Williams Realty | 360 Lending Group
0 votes Thank Flag Link Wed Feb 9, 2011
No short sale is alike even with the same lender. A short sale is when a lender is willing to take less than what is owed on the property and settle the debt. A big factor is if the home was refinanced or if it is a purchase money loan. Some lenders will ask for the seller to come in with some money and others will not ask for anything. HAFA short sales will give you the terms of the short sale upfront so you know in advance what price the lender wants and what the conditions are. I've included a link to the IRS website that may be helpful.
0 votes Thank Flag Link Tue Feb 8, 2011
You should contact your broker for assistance. The deficit is the responsibility of the seller- you will need to contact the seller's bank (short sale department for specifics) with regard to liability. This can be a very lengthy process and takes a lot of patience with regard to paperwork. If possible, have your seller talk to an attorney with regard to liability.

Best of luck to you

0 votes Thank Flag Link Tue Feb 8, 2011
I did one for a friend last month. Does your association offer sfr short sale and foreclosure certification? Take it - it helps alittle. I could email you and give you some info that will help. I priced mine really well - had 65 showings 15 offers and closed in 30 days! First one too. Loved it.
0 votes Thank Flag Link Tue Feb 8, 2011
Thanks for asking. If your friend is seeking your help, don't handle this all by yourself. Get partnered with an experienced short sale agent. Your friend can get the help they need and you can learn from someone else.
To answer your question, it really depends on a number of factors. Ideally to our sellers, the bank takes the entire hit and relieves the seller from any further obligation. In some cases the bank takes the hit and pursues the seller for a deficiency. If there is a second mortgage, the first may not take much of a loss, but the second may release title only with by maintaining the right to pursue the seller for the balance.
This is barely scratching the surface, and there are various state laws which may make some of this inaccurate. In any case, start to learn about short sales and partner up with someone with recent success and both you and your friend will be better off.
Check out the site below for lots of help on the subject of short sales and a possible partner.
0 votes Thank Flag Link Tue Feb 8, 2011
it depends. sometimes the bank takes the hit, sometimes there is a judgement against the person. They need to talk with the bank.
0 votes Thank Flag Link Tue Feb 8, 2011
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