The term Short Sale is used to refer to those real estate transactions in which the agreed-upon purchase price is insufficient to pay off all of the secured debt on the property including the costs of closing and real estate commissions.

In most Short Sales, the seller must secure an agreement from one or more third-party creditors to accept from the closing proceeds something less than the remaining amount of debt due them. In other words, the debt is “shorted” or reduced. The one thing common to all Short Sales is that the final decision on price and terms of the transaction, as well as the identify of the ultimate buyer, will be in the control of the third parties, usually creditors, whose consent to the transaction is required in order for the seller to convey clear title to a buyer.

Just to make sure we’re on the same page, a short sale is simply when a lender accepts less for a home than is currently owed.

In Short Sales transactions, seller and buyer should be prepared for delays resulting from requirements and process time from creditors, changes to the price, terms and conditions agreed upon in the original transaction, responses from third-party creditors, as well as other events outside of the seller’s and buyer’s control.

As A Buyer, right now there are great opportunities to purchase a home well below market value. If you don’t mind the little bit of extra time involved you could reap huge rewards through a Short Sale and have instant equity in a home.

As A Seller, you need to know that a foreclosure is bad business for a bank and you. That means that there is a huge upside for doing short sales. And these days, banks are motivated to minimize risk as much as possible. A short sale does that for them. Doing a short sale keeps you from loosing your home to foreclosure and keeps you from having the negative mark of a foreclosure on your credit.

That’s HUGE!

ALL major lenders do short sales. In fact, they have entire departments dedicated to that very thing. It’s called the loss mitigation department. It’s just that sometimes what they SAY they’ll do and what they’ll actually do are two different things. To do short sales, you have to learn the process and it’s a new skill that most Realtors simply don’t know. The sooner you begin the short sale process with a knowledgeable agent the better it is.

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