What is a Short Sale?

A short sale is when a lender agrees to receive less money on a mortgage to avoid possible mortgage or trust deed foreclosure or bankruptcy.

During a short sale, even though homeowner sells property, in reality buyer is purchasing property from lender at discount.

In a typical short-sale, homeowner owes more money in his/her existing mortgage that what property is selling for.  For example, homeowner’s mortgage is $400,000 and bank accepts to sell property at $350,000 as a full payment. Because bank accepts less money than what is owed on mortgage, is a short sale.

Events that may trigger a short sale:
  - Homeowner has fallen in economic-hardship and has difficulties making mortgage payments.
  - Homeowner is in foreclosure and unable to bring mortgage current.
  - Property values.

There are several reasons why lenders may agree to a short sale:
  - Lenders do not like to have excess inventory of properties, because their money is locked
    on properties.
  - Lenders do not like bad loans in their books because may harm their business and reputation.
  - Lenders know that potentially more money may be loss if property goes to foreclosure.
  - Lenders want to avoid the headaches of dealing with foreclosures or bankruptcies.

Fore more information about the Short Sale process, contact us!