What is a Short Sale?
A short sale is a type of real estate transaction that can help prevent a homeowner from being foreclosed upon. A short sale occurs when the market value of a home is less than the mortgage amount owed to a lender. Since the mortgage company will lose money on the sale of the home it must approve the purchase price and determine if the seller has some type of financial hardship.
Example Short Sale Breakdown:
- Mortgage Amount: $200,000
- Market Value of Home: $175,000
- Closing Costs (About 8%): $14,000
- Net Sale Value = $175,000 – $14,000 = $161,000
- Lender Loss: $200,000 – $161,000 = $39,000
How does a short sale get approved?
The two main requirements for a short sale to be approved are that the market value of the home is less than the mortgage owed and the seller must be able to demonstrate some type of financial hardship to their lender. Financial hardships come in a number of forms, but some of the most common examples are job loss, medical illness, divorce, or death of a borrower on the loan. If one of these hardships can be proven to the lender and there is a reasonable explanation as to why the homeowner can no longer afford the payment or has stopped making mortgage payments, a short sale may be approved. If you have further questions on what qualifies as a financial hardship please feel free to CONTACT US.
What are the benefits?
There are several benefits to a homeowner completing a short sale versus letting the property foreclose. Some of the key ones are:
- Mortgage debt is forgiven by lender
- Less of an impact on seller’s credit score than a foreclosure
- Avoid filing for bankruptcy
- The lender will pay seller closing costs
A short sale is a much better solution to a homeowner who is struggling with their mortgage payments or has fallen behind in their mortgage payments. Patience and effort is required to get through the short sale process, but the benefits far outweigh the downside of a foreclosure or even bankruptcy
How do we help?
The short sale approval process may seem straightforward, but each lender has different criteria that they follow and the process can be confusing. Our company has been assisting real estate agents and homeowners to successfully facilitate short sales for over 15 years.
We have worked with every major mortgage company in the industry and our proven track record of success gives us the expertise to greatly increase the chances of getting a short sale approved, plus we decrease the time it takes to complete the process.
If you are a homeowner or a real estate agent working with a homeowner and are considering a short sale, please EMAIL US to schedule a free 30-minute consultation. Or for more information on short sales, download our GUIDES.