SHORT SALES

In real estate, when a bank or mortgage lender agrees to discount the balance of a loan due to economic hardship of the mortgagor, it is called a short sale. Short sales are becoming more common in today’s lagging real estate market.

The process involves the home owner/mortgagor selling the property for less than the outstanding balance of the mortgage, and turning over the proceeds of the sale to the lender in full satisfaction of the debt.

A short sale is generally executed to prevent a home owner from going through a foreclosure. A Lender will take into account a borrower’s financial situation and the current real estate market when considering approval for a short sale. It is common for the mortgagor to provide the bank with a Hardship letter, or detailed run-down of their financial situation as proof.

A short sale is usually cheaper than a foreclosure, and the bank loses less interest on the property that way. The home owner’s credit is not as affected by a short sale as it is with a foreclosure, and a short sale is mutually beneficial to both the lender and the borrower if all criteria are met and the short sale is approved.

A mortgagor will negotiate the details of the short sale with the bank, and the property will be marketed for quick sale. A good realtor will find the right buyer for your short sale and close on the property in a timely manner.