What is a Shortsale?
In Short, no pun intended, a Shortsale is when the primary leinholder, or the bank that carries the loan for the homeowner agrees to allow the home to sell to another party for less than the original loan amount owed.
For example. Homeowner A Buys a home on Mercer Island, WA in 2005 when the real estate market was at it's peak. The loan was a zero down or similar type adjustable rate mortgage loan. Come 2009, the rate skyrocketed and the monthly payments hit the roof, the homeowner now can hardly keep up with the already high mortgage. The homeowner now cannot make the payments to the bank and must now sell it as a shortsale. for $450,000
The Agent steps in, Puts the home on the market, not at the price that is owed ,$450.000 but at a price he knows will generate an offer. such as $350,000. Once an offer is presented to the bank, They must then decide if they are willing to take a $100,000 loss. The bank may accept it after some negotiating but ask the homeowner who took the original loan to pay back the $100,000 loss over time.
If this is not agreed upon by either parties, the home goes into Foreclosure and the bank ends up taking the entire loss then needs to sell it themselves on the open market as a whats referred in real estate circles as an REO.
Winner: New Homeowner
Loser: Homeowner A
Loser: Bank
Loser: Tax Payers
Photos, Videos and Graphics by Sonny Kwan Realtor® with John L Scott Real Estate Seattle, WA. All information is believed to be accurate, but is not warranted in any way. When you plan to buy or Sell your home on Mercer Island, WA Visit my website www.mercerisland-homesforsale.info to search all homes on the internet.
What is a Shortsale? © 2010 By Sonny Kwan All Rights Reserved
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