What is a Short Sale? | Monday Minute April 12, 2021

One of the most misunderstood terms in real estate is the Short Sale.  What is it?  Is it something that happens fast? Like a fire sale?  No.  In fact short sales often are some of the longest real estate sales to take place.A short sale is a real estate sale where the seller's lender agrees to accept less than the current amount still owed on the mortgage.  In other words asking the lender to sell “short” of what is owed.A short sale often occurs as a way to avoid foreclosure.  And a Lender is generally more interested in a short sale vs a foreclosure, as they can recoup more of what was owed.  And as a homeowner, a short sale will not impact your credit or your ability to purchase later down the road as much as a foreclosure can.For a short sale to take place, often two things have occurred:

1. The homeowner has fallen behind on payments, and financially incapable of catching up.

2. The value of the home is worth less than what is owed on the mortgage.

The reason that a short sale isn’t necessarily a short process is due to the third party approval from the lender holding the note for the seller's mortgage.You see, once a Seller accepts an offer on the home, that offer must then be approved by the lender.On average, this process can take about 30-90+ days. Why? Well, in short, the lender has to do their due diligence to get a 3rd party evaluation of the home's value, determine the final costs and payoffs based on the value, and then present to the investor or investor group holding that note.Next, the lender will come back to agree, counter, or reject that offer. Assuming that the offer gets accepted, then at settlement, the Seller will be released from the mortgage loan.As a certified distressed property expert, I have helped many home sellers through the short sale process.  For those that find themselves in a scenario that you can’t make your payments and you need to sell, it is a stressful position. But know that there is a way to possibly get out of that.  If you have any questions about the short sale process or you have been served a foreclosure notice, give us a call today to find out how we could help you.Ps.  Right now in this market in 2021, we are experiencing a spike in home values that those who may have been underwater, mortgage-wise, you may not be anymore.  We recently helped a family looking at potential foreclosure, get out of foreclosure, catch up on the amount owed, and walked away from the sale with over $50,000.  And we could help you do the same!