WHAT IS A SHORT SALE?

A real estate short sale is when a home owner can no longer afford their monthly mortgage payments and they negotiate the sale of their property with the help of a professional Realtor and a qualified buyer to purchase the home for less than what is owed on the mortgage. The Realtor, seller and their attorney present the offer to their lender asking for permission to grant the short sale. By completing a short sale, the deficiency debt is granted on the home usually with no tax implications (check local laws). Short sales have become common in the past 5 years due the down turn in the economy and the decline in home values since 2007. Another term for “short sale” is “underwater”.
Not every property qualifies as a potential short sale in a bank's eyes. A bank must agree to grant a short sale. Banks are under no obligation to approve a short sale. Banks will grant a short sale if the bank feels it is in the bank's best interest to approve the short sale. The home can also be a short sale if the accepted sales price is higher than the mortgage but not high enough to pay off all of the closing costs and commissions. Moreover, in some instances involving 2 mortgages, the sales price might be high enough to pay off the existing first mortgage yet insufficient to completely pay the balance due on the second mortgage. If there is a shortage involved to close, it is a short sale
The benefit to the bank in approving a short sale, is if the bank will make more money through the short sale than to foreclose on the home. It is estimated that banks might save 25% to 30% on foreclosure costs to grant a short sale over a foreclosure.
The primary benefit to the homeowner is loan applications do not ask questions about a short sale. You can report that you sold your home and maybe eligible for financing on a new home purchase 1-3 years after the short sale.
The down side to a foreclosure or deed-in-lieu of foreclosure, the loan application will ask: "Have you ever had a property foreclosed upon or given a deed-in-lieu of foreclosure during the past 7 years." If the bank sees you have had a foreclosure, your loan most likely will be denied. If you lie, you may be subject to investigation by the FBI for mortgage fraud.
If you are in a precarious hardship situation (liens pending/pre-foreclosure), with the proper guidance, I can help you navigate the short sale transaction. I have completed and have been trained as a Short Sale Foreclosure expert (SFR). I have represented sellers and buyers who have successfully completed the short sale transaction. Some banks have been offering financial assistance to their borrowers to help pay for moving costs or 1st month’s rent and security deposit.