what is a sort sale?

Asked by Rhoda Ludy, Indianapolis, IN Sat Aug 13, 2011

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Meena Gujral’s answer
Meena Gujral, Agent, Pleasanton, CA
Wed Apr 10, 2013
Hi Rhoda,

A short sale is a sales transaction for which a seller's mortgage lender voluntarily agrees to accept a loan payoff of less money than what is owed on the mortgage loan. In a short sale, the property may or may not be in foreclosure. However, homeowners may consider short sales as a viable option for avoiding foreclosure.

Are you asking this question as a buyer or seller? Here is some helpful information I would like to give you on Short sales from the California Association of Realtors website for sellers and buyers:

Tips For Consumers

Below are general tips prepared by the CALIFORNIA ASSOCIATION OF REALTORS®. However, these just skim the surface of information available through your REALTOR®. As a member of C.A.R. your REALTOR® has access to this information in its entirety, and much more!


1. Hire a REALTOR®!
Not all real estate agents are REALTORS®. REALTORS® are members of the NATIONAL ASSOCIATION OF REALTORS® and voluntarily pledge to abide by the strict code of professional ethics.

2.Take a Proactive Approach
The short sale process can take a lot of time and effort on your part, so taking a proactive approach to your short sale may help you complete the transaction as quickly and painlessly as you can.

3. Knowledge is Your Friend
The short sale process may be new to many sellers and is much different than a normal transaction. It is important to know what you are getting yourself into.

4. Do Your Homework
As early as you possible, determine your lender's short sale requirements and whether you satisfy those requirements.

5. Get a Good Price For Your Home
Getting a good sales price not only improves your chances of getting your short sale approved, but may also have other advantages.

6. Submit a Complete Short Sale Package
Provide your lender with a complete short sale package containing all the required information and documentation in an organized manner.

7. Be Patient But Persistent

8. Avoid Scam Artists
Be wary of scams. Your REALTOR® will help you avoid getting duped.


1. Hire A REALTOR®!
Not all real estate agents are REALTORS®. REALTORS® are members of the NATIONAL ASSOCIATION OF REALTORS® and voluntarily pledge to abide by the strict code of professional ethics.

2. Knowledge is Your Friend
The short sale process may be new to many buyers and is much different than a normal transaction. It is important to know what you are getting yourself into.

3. Do Your Homework
Gather and review as much information about a transaction as you can before writing an offer to purchase. Your REALTOR® can help you identify which properties for sale in the Multiple Listings Service are short sales.

4. Write A Clean Offer
This describes an offer to purchase that the seller is unlikely to take issue with.

5. Understanding the Timing
A short sale may take a long time and it is important to understand the timing of the process.

6. Prep as Best as You Can

7. Manage Your Expectations About the Property

8. Don't Lose Sight of the Big Picture

Meena Gujral
Help-U-Sell Achievers Realty
0 votes
Margaret Has…, Agent, Tampa, FL
Tue Apr 9, 2013
A short sale occurs when a home is sold for less than what is owed on the property. The lender must approve the sale before it can be sold. To find out what your home is worth, go to http://baehade.homeinfo.us/
0 votes
Debbi Tinker, Agent, Brandon, FL
Sun Aug 14, 2011
Hi Rhoda,
If you are on the selling side of a short sale, the link below will would be good information. The Mortgage Forgiveness Debt Relief Act of 2007 was an important change and will be in effect until 2012.


Best of luck to you!
Debbi Tinker
0 votes
Liane Jamason, Agent, Saint Petersburg, FL
Sun Aug 14, 2011
The other agents have done a great job explaining what a short sale is. Be sure to hire a Realtor who is a Certified Distressed Property Expert if you decide to do a short sale as they are complex transactions that require training and experience on the part of the agent.

I have a 100% success rate with my short sales in the last 4 years.

Liane Jamason, REALTOR
Keller Williams Realty South Tampa
813-486-4997 Tampa
727-498-9120 St. Petersburg
0 votes
Jana Hristova, Agent, Tampa, FL
Sun Aug 14, 2011
Rhoda, short sale is agreement by the bank to receive less than the amount due when the house is sold. The bank agrees to a short sale because it is less expensive than going through the foreclosure process.
There is a new Home Affordable Foreclosure Alternatives (HAFA) program that you might want to look into. Here is a link with more information.
0 votes
Lisa Reeves, Agent, Tampa, FL
Sat Aug 13, 2011

To answer your question - a short sale is when a property that is put up for sale cannot be sold for enough to cover the pay-off for the mortgage. If the seller cannot cover the amount that the property is sold then they must ask the lender to allow them to sell for less money. It was common to see short sales previously for extreme cases such as death, divorce, or disability. Since the market has taken a turn for the worse - short sales are now allowed for a wider range of hardships such as unemployment and pre-foreclosure. If you would like information on short sale - I am available during the daytime tomorrow.
0 votes
Lynn Brock, Agent, Sarasota, FL
Sat Aug 13, 2011
Rhoda Ludy, Real estate is an industry of supply and demand. We are now in an economic time that has an overabundance of supply and not enough buyers. This combined with the large number of foreclosures the market value of properties has declined.

Homeowners that purchased a home between 2004-2007 purchased properties that today would be sold for less.

For example, Mr. and Mrs. Homeowner purchased a home for $300,000 in 2005. Today they decide to sell their property. A market analysis of the property shows it is valued at $100,000 in 2011. Their mortgage (based upon their initial purchase) is $250,000. So they are now in a position where they owe the bank $250,000 and the most they could sell their property for is $100,000. Thus, they are $150,000 upside down.

To continue, they decide that they have to sell. They list the property and start to assemble all of their paperwork for submission to their lender. The short sale begins with a purchase offer. At that point, the Homeowners ask their lender if the lender will accept a short sale. Over the years the government has changed this process many many times and the lenders each have their own criteria for a short sale. The short sale transaction is basically getting out of a mortgage rather than getting into a mortgage. It requires the same basic paperwork and then some. Today there are additional criteria that will be required but this is a very simple explanation.

The mortgage payments do not have to be behind to ask for a short sale. This has become a pretty complicated transaction. You would be best to contact an agent in your area for more specific information.
0 votes
Tom Scaglione…, , Tampa, FL
Sat Aug 13, 2011
For information on a Short Sale go to my website http://www.GoingShortSale.com and also my blog http://www.RealEstateTampaBayBlog.com there you will find information on short sales. The most important thing to remember as a buyer is a short sale does not affect you and you will receive a fully clear deed just as in an arm's length sale. Sellers on the other hand will be granted a short payoff on their loan. In some cases the seller will be forgiven the difference in the loan amount and the short payoff and in others they may still be liable for the difference depending on the circumstances.
Web Reference:  http://www.RealEstateTom.com
0 votes
Lyle Wolf, Agent, Morristown, NJ
Sat Aug 13, 2011
You may find this article helpful as an answer to your question:
What Every Buyer Should Know About Short Sales

This also might be helpful:
The 4 Foreclosure Related Real Estate Opportunities
0 votes
Ron Thomas, Agent, Fresno, CA
Sat Aug 13, 2011
If were a homeowner, and you were behind on your payments; you could ask the Bank to let you sell the house for less than you owe them for it: Thus, the name Short Sale.

It takes a lot longer than a Foreclosure Sale, allows you to live in the house until it is sold, and hurts your Credit Rating less.

As a Buyer, you can pick up some good buys; you just have to be prepared to wait a long, long time for the deal to go thru.

In both cases, the deals are done through Realtors; representing the Bank and representing YOU.

For more information, talk to a Realtor.

Good luck and may God bless
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