What is a short sale?
What is a short sale?
A short sale is a sale of real estate in which the net sale proceeds fall “short” of the balance owed on the property’s loan or loans.
Home sellers should consider a short sale when the value of their home is LESS than the amount of their outstanding loans. For example, if your home is worth $250,000 but you have a loan of $260,000 then a short sale is a consideration. Obviously, if you do not have to sell your home, you could wait out the market and hope for a turnaround in real estate values.
However, if you do have to sell your home you basically have three options. First, you can bring cash to the table. In the example above you would sell your home for $250,000 and pay another $10,000 to the lender out of your pocket to pay off the loan on your property. Second, you could let the home go into foreclosure. The lender will go through the foreclosure process, force you out of your home and then auction it off to the highest bidder at a foreclosure or Trustee’s Sales auction. The third option is to pursue a short sale. You contact the lender, explain the circumstances and convince them to take less than full value of their loan.
In the case above you may tell them you have a buyer for $250,000 and it’s very unlikely there will be a buyer at a higher price. If they will accept $250,000 for their $260,000 loan then you can proceed with a short sale. Sometimes the lender will consider a short sale before you have a buyer and you can market your property and, if you find a buyer, take their offer to the lender for consideration. The lender may or may not accept the offer and terms of the short sale are always negotiable.
A short sale is when a lender accecpts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying form the seller, you are purchasing the property directly frpm the lender for a discount. It is best to buy a short sale when it is in the pre-foreclosure state.
A short sale is real estate transaction where the lender receives less than what is currently owed on the property and removes all liens against the property.
As a first step, take a look at the Arizona Short Sale Seller Advisory.