What is a Short Sale?
A short sale transaction (also known as a short payoff) occurs when the proceeds received from a sale of the home are less than the outstanding balance of the loan(s) securing the property, and the seller is unable to pay the shortfall, also called the deficiency balance. This may be because, the value of the property has declined or the seller is delinquent on payment and headed into foreclosure. To avoid the costs involved in pursuing a foreclosure and the possibility of acquiring the foreclosed property, the existing lender agrees to release the mortgage in exchange for an amount less than the outstanding balance of the mortgage debt. The terms of the short sale may be negotiated by the seller/homeowner directly with the existing lender, or through a third party (e.g., a short sale intermediary or foreclosure attorney). From the buyer’s perspective, the transaction proceeds mostly in the same manner as a conventional purchase.
Today, banks and lenders have become somewhat more negotiable when it comes to options for dealing with default including the sale of your home for less than the balance due. Recent changes in corporate policy and efforts by the housing administration have also improved the chances of getting a short sale approved. For homeowners to potentially qualify for a short sale, they must:
Establish a proven hardship. Not only does hardship open the gateway for the conversation with your lender, a homeowner must first confirm with their lender that short sale is an option for them. Each mortgage company is different; so, it’s best to contact your bank and speak with a loss mitigation specialist.
List your property for sale
Banks require you to list your property with a licensed real estate agent one that specializes in and has been trained to handle short sales, you cannot list your home for sale by owner. Most banks or lenders require your home to be listed at Fair Market Value for at least 90 days prior to considering a short sale approval, however, each bank/servicer is different.
Consult with a licensed real estate professional specializing in short sale transactions for more details on the listing process.
Seek legal help
The otherwise simple process is quite complicated and usually takes the expertise of experienced professionals or attorneys trained to facilitate and navigate the short sale process. Therefore, it is not unusual for you or your real estate agent to struggle with process. If you need help please contact our office for a FREE, NO OBLIGATION CONSULTATION.