I can’t tell you how many times I get this question from clients, family, collegues and various others in the course of a week. It is a relatively new concept, only really becoming popular within the last few years, and lately seems to be the situation with a good portion of my listings and those listings that buyers I am working with are interested in buying.
A short sale occurs when a seller’s lender agrees to take a payoff for less than balance owed on their loan. Then they either forgive the remaining debt or ask the seller to pay back all or some of the debt, through a promissory note or cash contribution. When a seller chooses to sell their home in this fashion it is typically a result of a hardship. Home values have plummeted over the past 5 years and that, combined with job losses and a very tough economy overall, have caused many home owners to resort to this option.
There is a common misunderstanding that a short sale is when the bank (seller’s lender) owns the property and has the right to sell it at their terms. That is actually the definition of a foreclosure. With a short sale, the seller still owns the property and ultimately gets to accept or decline the buyers offer. However, since they are asking their lender to take a “short payoff” the bank does get a say in whether they will accept the final number.
After dealing with a multitude of short sales I have become an expert in marketing and closing these sales. It can often take months for the bank to process the paperwork. However, it’s a great option to help a seller avoid foreclosure and preserve their credit as much as possible, allowing for a faster financial recovery. If you or someone you know is considering a short sale, please contact me here. I would be happy to discuss your situation.