johntriolet, Other/Just Looking in Saint Augustine, FL

what does short sale mean?

Asked by johntriolet, Saint Augustine, FL Sat Jan 12, 2013

Help the community by answering this question:


1. Current owner still owes 500k on the debt (mortgage).
2. Market value of the home is 250k.
3. Current owner has to sale but they have decided not to cover their promise to pay the note.
4. The Lender has to take the hit, which in turn the American tax payers take the hit.

The difference between the amount owed on the original note and the amount the lender has to take the hit on due to the owner not for filling their promise to pay, is a short sale.

Hope this helps.
Web Reference:
0 votes Thank Flag Link Mon Jan 28, 2013
A short sale is originated when a homewowner owes more on their property than it is currently work. Buyers who look into a short sale purchase think this option can save them a great deal of money. This type of sale requires an experienced realtor, because they are so many parties involved in the transaction, not only buyer, seller, title company, but the bank or financial institution that holds the mortgage have to approved the transaction. If you decided to go thru a short sale process, be patient. While, not two transaction are exactly alike, most of them can take between 3 to 9 months.

Best of Luck,

Maria Cipollone
0 votes Thank Flag Link Mon Jan 28, 2013
A short sale is when a seller is attempting to sell their home for less than they owe on their mortgage.
The trouble with short sales is that the vast majority of Sellers don't qualify for them and don't bother to find this out before listing their home this way. This problem is compounded by the lenders who typically refuse to evaluate the Seller (if requested) until an offer is on the table. So a buyer ends up getting what is essentially a worthless contract to purchase a property signed by the Sellers with the caveat that the sale must be approved by their lender. Now it's time to LET THE WAITING BEGIN.

Typically buyers need to be prepared to wait between 3-6 months to get a response. Statistically the response in more likely to be no than yes, and the reason is that the Sellers don't qualify. The primary reason Sellers aren't approved is because they do have assets and can afford to pay their lender what they owe though there are other reasons as well. The second most common reason is there are multiple lien holders on the property and one or more of them doesn't agree and that's all it takes to negate the sale.

Personally I don't waste my time on short sales unless their indicated as being preapproved by the Lender. (This may account for 1% of short sales in my part of the country) Often these properties end up in Foreclosure.
0 votes Thank Flag Link Mon Jan 28, 2013

1. Warning, cliff ahead!

2. Clown Car Full of Horrors

3. Danger, Danger Will Robinson!!

4. 10 month NIGHTMARE

Do yourself a favor and stay away from short sales!
0 votes Thank Flag Link Mon Jan 28, 2013
A short sale is simply a situation where what the owner is selling his/her house for less than what is owed the bank. For example, the owner purchased the home in 2005 for $400,000, today because of market depreciation, that same home only has a market value of $300,000. The lender has to agree to accept a short payment of $100,000. The approval process can be lenghy and sometimes convoluted. There is no guarantee that the bank will accept the short payment. If they do, the buyer purchases the home discounted and the original owner if relieved of the debt with a hit to the FICO score. Hope that helps.

Janet Nation, CBR
Sailing Home Realty
Direct: 646-321-9649
Office: 516-377-4760
Licensed Real Estate Salesperson
0 votes Thank Flag Link Sun Jan 27, 2013
Why Buying a New Home Over a Short Sale Makes Sense

There are many Short Sales that never get to closing. The listing agent really needs to know what they are doing. They must know if the Seller meets the Lender's Short Sale candidate criteria. They must have the proper knowledge to help the seller compile a complete Short Sale package. Finally they must have knowledge of the local real estate market and the ability to overcome a dispute with the with the bank's negotiator over fair market value.

A Buyer may put in a low offer, the Seller may accept it, and everyone may celebrate the home is now under contract! Yeah, the Buyer thinks they got a steal of a deal, the Seller thinks the mortgage burden may finally be off their backs and the agent is planning a trip to the Bahamas with the commission they will make.

Then they wait. And they wait some more. The Lender asks the Seller for more documentation. We all know what happens next.... they wait some more. Meanwhile, the Buyer gets the home inspected by a professional Home Inspector. The inspector finds that since the seller has vacated the home over a year ago, the A/C is bad, there are plumbing issues and the roof needs to be replaced. Not a problem says the Buyer, we got this steal of a deal price on the home, we can definitely put the money in for repairs.

Months go by, and the Lender finally comes back denying to except the low price and counters much higher.

The buyer's steal of a deal is no longer such a deal and they walk away from the transaction. Now everyone is unhappy. The Seller still has the burden, the agent is not going to the Bahamas and the buyers have no where to live.

Months were wasted during that Short Sale fiasco. The Buyers could have instead, used that time to build a brand new home, select all the beautiful options they love with the colors that make smile. Within a few short months the new is built, the Buyers are thrilled with their new home with a warranty and the agent gets to go to the Caribbean after all. Everyone is happy!

This is why buying a new home over a short sale makes sense.

Thinking of new homes in St. Augustine? Visit a Landon Home community today. Building in Kings Trace, Oakbrook and custom homes on your lot.

Marjorie Taylor
Landon Homes
0 votes Thank Flag Link Sun Jan 27, 2013
This link should help:

With enthusiasm,

Meir Aloni & Team

CRS (Certified Residential Specialist)

CDPE (Certified Distressed Property Expert)

RECS (Real Estate Cyberspace Society)

Successfully selling Broward County since 1986!

Direct phone# 954-338-5220

All Star Realty Inc.
0 votes Thank Flag Link Sat Jan 12, 2013
From a buyer's prospective, when you see that a property is a short sale, that will probably mean that you will need extra time to complete the transaction. When you make an offer on a short sale, you will be signing an additional addendum stating that you understand the property is a short sale and that the seller will need to get approval for the sale from their lender. Whatever amount you are offering for the purchase of that home is less than the amount needed for the seller to pay off their mortgage to the lender or lender(s) if they have more than one mortgage. The seller will submit their financials to see if they will be considered by their lender to be in a situation that dictates that they need a short sale. Then the short sale lender will get an appraisal or Broker Price Opinion so they can determine that the seller is getting market value or close to market value for that property -- and, if they don't feel that the seller is, they will ask the seller to go back to the buyer with a new "approved" sales price that the short sale lender has determined is needed to approve the short sale. Your choice at that point is to agree to the new price, walk away from the purchase, or, you could make another offer somewhere in between, but there is no guarantees that the short sale lender will approve that. When you see a property advertised an "approved" price, it usually means that the property and/or seller has already been through some of the process and has a price that the short sale lender has approved. Keep in mind that all short sales, like bank owned properties, are sold "as is" meaning that you will be able to inspect the property prior to purchase, but the seller will not make any repairs that you may request as a result of that inspection. It is assumed that if they cannot pay their mortgage -- they cannot make any repairs you may request either. So, your inspection is for the purpose of determining if the property is in a condition that you feel that you can move forward with the purchase. Once you have received approval from the short sale lender, they will chose a date by which they want the property to close -- you will complete your inspections -- and then move on to closing on the property. I hope that definition helps in your understanding and wasn't too long winded. If you have further questions, or I could be of further help, please do not hesitate to contact me -- Karen Peil, Broker Associate, Prudential Network Realty, 904-501-3070, email: or visit my website at Good luck!
0 votes Thank Flag Link Sat Jan 12, 2013
This link will explain how Short-sales differ from foreclosures and traditional sales:… Was this answer helpful? If so please click on the "green thumbs up" or the "best answer".

Tony Vega
La Rosa Realty
0 votes Thank Flag Link Sat Jan 12, 2013
for the seller is means:

1. walking away from their contractual obligation and promise to repay the loan

2. stop making their mortgage payments and racking up late mortgage payment

3. hiding money from the lender by moving current savings and extra money on hand each month due to not making their house payment to a family member’s account or saving it is cash in effort to look like they can't afford the mortgage

4. then after the short sale is completed, they suddenly have a 10% down payment saved to buy another home and complain because they find nobody will give them a loan for 3 yrs regardless of a700 credit score

for the bank it means:

1. having a borrower try to, in effect, extort money from them by threatening to go into foreclosure

2. letting the borrower believe they will be able to short sale, so even though they stopped making their payments, they stay in the home, keeping it up, while the bank drags out the process for 12 mo by repeatedly re-qualifying the sellers for the short sale and requiring BPO after BPO

3. having the borrower’s attorney, in effort to make money, advise the borrowers to file BK and include the house. Then the bank let’s the house sit and does not actually transfer title for sometimes years after the borrower’s BK discharge date. This then becomes as a major surprise to the borrowers three years later when they go to buy a home and find they can’t because the title had not actually transferred and their 3 yr waiting period has not started yet.

0 votes Thank Flag Link Sat Jan 12, 2013
It means you would like to get out of your debt obligations (home mortgage) but your current home's value will not cover the remaining balance owed. So, you would take the best offer you can get and apply to see if the lender will accept a repayment that is short of the amount owed. (That's what the "short" part refers to, not the time involved in the process.)

If the lender approves your case, you would have the unpaid portion of your debt forgiven. For this act of generosity to bailout homeowners, banks have received hundreds of billions in tax dollars from your fellow taxpayers (neighbors) and future generations.
Web Reference:
0 votes Thank Flag Link Sat Jan 12, 2013
Did an article on that very question in November at:
0 votes Thank Flag Link Sat Jan 12, 2013
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