Simply put a short sale is when the lender is willing to let the property to be sold for less than owed.

Hi Zi,

Below you will find a Short Sale Explanation Sheet. It covers many FAQs and should give you a good sense of what a short sale is. I am a CDPE (certified distressed property expert) and specialize in short sales and foreclosure properties. Please feel free to call me with any additional questions you may have - 386-871-3185. Caryn

Q : I keep hearing the phrase 'short sale'. What is it and how does it affect me?

A : Many people have heard the term but don’t have a good or full understanding of what it means. A short sale is when a homeowner owes more on a home than it is currently worth. The seller has found themselves in a situation where they can no longer afford to stay in the home due to some hardship (moving, divorce, job loss, illness, etc). The seller markets the property for sale through the help of a Realtor®, preferably a CDPE (Certified Distressed Property Expert). Once they receive a valid offer, it is presented to the lender. The lender is asked to forgive the debt owed by the borrower; Mortgage(s) - sales price. Don’t feel alone in this situation. Currently there are approximately 7,000 pre-foreclosure properties in Volusia County alone – even a higher number in Flagler.

Q : Is this really realistic?

A : Absolutely! It is happening quite often actually. On average, 85% of the pre-foreclosure properties are most likely eligible for a short sale. The lender and owner are both making the best of a bad situation. The lender and seller are both trying to avoid foreclosure – the lender does not want the house back and for a seller, a short sale is the most favorable option in this situation (see attached breakdown). Foreclosure is an extremely expensive and lengthy process for a lender. At the end of the foreclosure process, the lender will own the property. With a short sale the lender saves money, the seller avoids foreclosure, which can be very damaging to their credit record and the community avoids an even more drastic fall in home prices which would be the result of a foreclosure in the neighborhood.

Q : What is expected of the seller?

A : The seller is expected to show some proof of hardship. They will need to produce financial statements and cooperate with all parties. However, the seller, in almost all cases, is not required to bring any funds to closing nor have any closing costs.

Q : Should I have an attorney involved if I plan to sell via ‘short sale’?

A : It is never a bad idea to have an attorney involved. However, when working with a CDPE, they will take care of the negotiations with your lender(s) and lenders prefer to negotiate with a Realtor® vs. a homeowner. Many times sellers in this situation do not have the funds to retain an attorney, which is why it is so important to work with a qualified professional.

Q : How do I market my property?

A : The same way you would in normal conditions. You work with a Realtor®/CDPE and place the home in the MLS, or multiple listing service. Once an offer is in hand, the CDPE takes the offer to the bank.

Q : When I ask a Realtor about a short sale I get the feeling they do not want to participate. Why is that?

A : Many Real Estate agents don’t have the experience necessary to handle short sales. This is an unfamiliar process to most. Some of us understand that this is something we have to work with and adapt to…others do not. Also, the short sale process can be very labor and time intensive to a Realtor and it is not always clear what an agent’s compensation will be as is not the case with a typical sale. The commission is paid by the lender and is often negotiated to a lower rate and will not be known until later.

Q: How do I find out if I qualify for a short sale?

A: You will need to sit down with a Realtor®/CDPE and determine that you qualify for a hardship. This can be a relatively easy process. If you can no longer afford your mortgage payments due to a change in your financial situation, for a variety of reasons, you most likely qualify.

Zi-

Many answers to this but in "short". A short sales is where the lender is willing to take less than what is owed on the property. ie selling the property short of what it is owed.