Short Sales

By
Real Estate Agent with Coldwell Banker Burnet

Just a little tidbit on Short Sales.

When a borrower is experiencing economic hardship the lender may agree to a short sale. This is basically discounting the loan balance to help the borrower out. When a borrower is interested in a short sale they should talk with the lender's loss mitigation department to negotiate a deal. Not all borrowers will be eligible The borrower/homeowner will sell the real estate for a price that is less than the loan balance and the money from the sale go to the lender and satisfy the debt in full. In a short sale, the lender determines whether a proposed sale is worthwhile or not.

A loan balance is not always discounted for a short sale and the circumstances surrounding the borrower's situation play a big role in whether a short sale is approved or not. Generally, the real estate market and the borrower's personal finances will affect the decision.

Generally, the reason a bank will accept a short sale is to help the borrower avoid a foreclosure on their home. When the bank believes that selling the home in a short sale would save them more money than a foreclosure would then they will agree to a short sale. The homeowner benefits significantly from this arrangement, too, because they have some control over the deficiency as well as avoiding having a foreclosure on their credit report. In most cases, a short sale is faster than a foreclosure and costs less money. This is why banks are willing to accept it. In general, a short sale is simply negotiating the amount of money owed on the loan down to an acceptable amount so the homeowner can sell the home and pay off the debt

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