Question Details

Debi, Both Buyer and Seller in Orlando, FL

what is a short sale?

Asked by Debi, Orlando, FL Wed Jan 30, 2008

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Hi Debi! A short sale really means something different depending on whether or not you are the buyer of a short sale home/condo, or the seller of a short sale home/condo. Rather than going into foreclosure, homeowners have the option of "short selling" their home(sometimes it is also called a "short pay" situation). It is very simple, as a seller you would be trying to sell your home "short" of what you owe....that is how I best explain it.

As a seller, you list your home and typically you list it for less than market value in an attempt to entice buyers and to get a quick sale. Every lender is different - some make you (as the seller) negotiate with them up front as to whether or not they will accept a short sale on your home/condo, and some lenders require you to find a buyer, negotiate a price and then present them with the option of the short sale at that time.

Either way, as a seller it is a long and difficult process, if this is the situation you are in, I suggest you hire an agent who is well versed in short sales and has had several themselves. In addition to that, you need to speak with an attorney and/or your tax person to better help explain to you things like the tax and credit ramifications of a short sell.

On the buying end of it, be prepared to be patient. You can often get a great deal, but depending on your time frame, most banks are taking anywhere from 2-4 months to negotiate and close short sales. If the seller has 2 loans (both from different lenders), it could even take longer. Make sure when you do write an offer that the time frame in which you have to do your inspections etc. and to remove your contingencies, does NOT begin until the bank(s) have fully approved the short sale in writting.

Hope this helps....sorry for the long answer...but short sales are not easily explained. Please let me know if you have an further questions on short sales!


1 vote Thank Flag Link Wed Jan 30, 2008
A short sale is when you end up selling your property for less than you owe to the bank (coming up "short" on the full amount owed). It requires that you negotiate with the bank to accept less than they are owed, and often involves a long protracted process.
1 vote Thank Flag Link Wed Jan 30, 2008
Alan May, Real Estate Pro in Evanston, IL
Before going the "Short-Sale" route Debi, you may wish to look at some of the links below. Many are facing the possibility of foreclosure. This is NOT the time to put your head in the sand. Find below links to answer many of your questions with links to articles and tips for homeowners facing financial difficulties.

1. “How To Avoid Foreclosure” by the U.S. Department of Housing and Urban Development (HUD): Yes, I know these are long but they get you right to the information you need rather than going through the whole site.

2. “Tips for Avoiding Foreclosure” also by HUD:

3. “List of Approved Credit Counseling Agencies” by the U.S. Department of Justice:

4. “You Can Avoid Foreclosure and Keep Your Home” by FHA :

5. “Mortgage Payments Sending You Reeling? Here’s What to Do” by the federal trade commission:

6. “Questions and Answers on Home Foreclosure and Debt Cancellation” by the IRS:,,id=174034,00.html
0 votes Thank Flag Link Wed Jan 30, 2008
A short sale is when a home is sold for less than the seller owes to their lender. Usually the lender(s) must approve the sales contract. So even if you have a signed sales contract, you don't really have a deal until the lender approves it. The whole process can take up a lot of time and energy.

If you are thinking of buying a property that is in a short sale situation, be prepared to have to wait, and wait, and then wait some more for the deal to actually happen.
0 votes Thank Flag Link Wed Jan 30, 2008
Your mortgage company will consider several factors before approving a short sale. And, ultimately, the decision to approve the sale is completely up to them, so you and your realtor will want to be as cooperative as possible. Short sales often take longer to implement than a standard home purchase, so you'll also need to be patient.

The mortgage lender will want to know the circumstances that caused you to fall behind on your mortgage payments and what your future financial prospects for repayment may be. They will also do their own assessment of whether it is more profitable to approve the short sale or repossess the property and put it on the market themselves. Although most mortgage companies are helpful, their goal is to make money so they can ultimately decide to proceed with foreclosure.

Betty Garcia
Web Reference:
0 votes Thank Flag Link Wed Jan 30, 2008
Elvis is correct : )
A few things to know... you have to be in serious financial hardship to be eligible. You need to write a letter of hardship to your lender and prove that you have no assets, including other property. Also, you can be taxed on the amount you come out short when the sale is closed. If you or anyone reading this has any questions on the short sale process let me know.
0 votes Thank Flag Link Wed Jan 30, 2008
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