Marc, Other/Just Looking in Vancouver, WA

what is a short sale ?

Asked by Marc, Vancouver, WA Mon Jun 6, 2011

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6
FRUSTRATING! That's what a short sale is. When someone has financial struggles and is unable to or will soon be unable to make their mortgage payments, rather than allow the lender to foreclose on the home, they contact their lender and ask them to approve a short sale. Short sale is simply asking the lender to allow you to sell your home for less money than you owe on it.

Please contact me with any additional questions you have.

Sincerely,

Lisa Markham
Envoy Mortgage, Ltd.
NMLS# 947738 / AZ# 0921717
520.240.9602
lmarkham@envoymortgage.com
https://lmarkham-envoy.mortgagewebcenter.com/
1 vote Thank Flag Link Thu Mar 27, 2014
Great answer, Lisa!
Flag Tue Jun 3, 2014
There is more owed to the lender on the home than it is worth. Therefore to sell the home to a buyer, the seller would have to bring money to the closing table and that is rare indeed. Depending on how "short" or how far "upside down" the seller is in negative equity is compared to current market value. Typically a fast short sale would occur in 90-120days... It really all depends on the listing agent handling all the necessary paperwork, and their ability to negotiate with the bank in regards to a settlement on the amount the bank(lender) will accept.
0 votes Thank Flag Link Sat Nov 16, 2013
A short sale is when the house sells for less than the owner owes on the property. When this happens, the seller has two options (1) pay the difference to the bank; or (2) ask the bank to approve the transaction for the lower amount and forgive the difference. Most sellers choose option (2).

Many REALTORS don't like pursuing short sales because they usually take longer to close, require more work, and involve a third party (the bank) in the negotiation. However, depending on the area you are looking at, short sales may constitute anywhere from 30% to more than 50% of the properties available for sale. So if you exclude short sales you may be eliminating a big percentage of the market.

Having said that, short sales are not for everyone. They usually take longer to close - because the need to negotiate with the bank. So if the buyer is on a hurry, short sales may not be appropriate.

The best candidate for pursuing a short sale is a buyer that has some time to move and will not get frustrated with the wait and sometimes long negotiations.

I hope this helps.

Good luck!

Jose Dias, REALTOR
(623) 418-5700
Jose@MyFirstHouseAZ.com
Realty One Scottsdale
0 votes Thank Flag Link Sat Jun 11, 2011
Good answers below, I won't repeat what they have said. Also, short sales are becoming more and more popular. The reality is that, in most cases, they are a better deal for the homeowner and the lender than a foreclosure. Banks and Realtors are getting more and more efficient at processing short sales.
0 votes Thank Flag Link Tue Jun 7, 2011
A short sale occurs when an owner has proven hardship to the lender and can sell for less than what is owed; the seller can accept whatever offer he/she wishes, but the lender decides to accept, reject or at times counteroffer; depending on each individual circumstance, short sales are by no means fast sales...
0 votes Thank Flag Link Tue Jun 7, 2011
It's when someone sells a home for less than they owe. In that case, the sale is subject to the lender's approval.

Example: An owner bought a home a few years ago for $200,000 and got a $200,000 mortgage. Now the house is only worth $150,000. The mortgage has been paid down a tiny bit, but the owner still owes $195,000. Since the house is only worth $150,000, the owner will be unable to sell for what he owes on the house.

So the owner does a short sale. He sells it for what the house is currently worth: $150,000. It's called a "short sale" because the lender--the bank--will come up "short"--on the sale. The bank will lose $45,000. So after the buyer and seller agree to the price of $150,000, it goes to the lender which either approves or disapproves the sale for $150,000. If it approves the sale, then the buyer can buy it for $150,000. The bank loses $45,000, although it might try to collect some of that from the seller. The seller walks away with no money and ends up with damaged credit.

A lot of short sales are not approved by lenders. Those that are can take months and months to be approved.

That's a short sale.
0 votes Thank Flag Link Mon Jun 6, 2011
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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