What is this term "short sale" that everyone is talking about? A short sale is a sale of a property that is short of the mortgage balance owed. Normally, if one owed more on their home than the value or sale price, the seller would bring the difference of the balance owed to closing in addition to the closing costs.
Yes, some sellers have come to the closing table with a check in excess of $100,000 just to sell their property in a tough market. In this market, when a seller has negotiated with the lender an agreement to sell the property and have the lender take a loss on the mortgage, this is termed a short sale.
Typically, the homeowner has missed some payments on the mortgage. In addition, the homeowner is not financially capable of making continued payments and is risking losing the home to foreclosure. The short sale precludes the foreclosure and allows the seller to close before the seller loses the home. Yes, it is a loss for the seller and a loss for the lender.
The benefit, as I see it, is the fact that the bank or lender does not have to wait while the foreclosure proceedings are completed. The foreclosure procedure alone, can result in high attorney's fees, a considerable amount of time (sometimes more than one year), deterioration of the property and a loss which is usually greater than the loss incurred from a short sale.
The benefit to the homeowner is being rescued from foreclosure and the humility of such a procedure. The term short sale is so widely used and accepted it does not hold the same stigma as the term foreclosure. Yes, the owner suffers some embarrassment but in this economic state, but most of us are humbled simply by the fact that we have all lost in this economy.
Short sales are a sign of the times. The market is full of short sale listings. A good Realtor can give you a list of such properties. Do not think that all of these listings are the best buys on the market as many sellers, who have equity in their property (since they purchased their home many years ago) are willing to sell at today's short sale prices.
The best buys of short sale properties are being absorbed very rapidly in today's market. Short sale listings often bring multiple offers. In some cases, the agreed sale price is more than the price agreed to by the lender. The fact that there are multiple offers occasionally push the price of the property slightly higher. Get those great buys while you can, the market is sizzling with cash buyers.
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