What is a Short Sale?

A short sale occurs when the sales price of a property is too low to pay off the mortgage balance(s) and all other necessary selling expenses (closing costs, other liens or judgments, etc). In this case, a lender may agree to accept less than what they are owed to allow the sale to proceed. Although there are exceptions, lenders will usually require some proof of a financial hardship before agreeing to discount the outstanding mortgage balance. There are also many other criteria that lenders consider in the decision to approve a short sale and that approval must be received for a sale to occur. Approvals are usually obtained by communicating and negotiating with a bank's loss mitigation department. If approved, the lender receives the proceeds from the short sale. Although the sellers receive no proceeds, they are usually relieved of at least a sizable portion (and many times all) of the mortgage debt.

What is Foreclosure?

A short sale is not foreclosure. In fact, a short sale is a means to prevent foreclosure. In Pennsylvania, foreclosure is the legal process that banks must follow in order to have a property sold at a Sheriff’s Sale to recoup the debt owed to them by a defaulting borrower. The Sheriff’s sale is the ending event of the foreclosure process and often takes 4 months or more from the initial filing of a foreclosure complaint by the lender. Because of the legal fees, filing fees, Sheriff’s fees, and months of accruing mortgage interest, foreclosure is a very expensive process for the lender. In many cases, a bank would rather take a smaller loss via a short sale rather than risk an even greater loss after foreclosure. This is especially true if a short sale can be completed before foreclosure is initiated and foreclosure costs start to accumulate onto the debt owed to the bank.

If you are a home buyer interested in purchasing short sales, foreclosures, or other distressed properties, click here to search for these specific properties.

If you are facing financial difficulty, would like to avoid foreclosure, and would like to consider a short sale, Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 for assistance in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania.

The Scott Loper Team
Scott Loper - Associate Broker
Lisa Loper - Sales Associate
RE/MAX Realty Group
439 Main Street
Harleysville, PA 19438
Ph: 215-256-1200 x-213