Short Sales Explained
A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their
homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today,
however, due to overwhelming market changes, banks and lenders have become much more negotiable when it
comes to these transactions. Recent changes in corporate policy and the Obama administration have also
improved the chances of getting a short sale approved.
But to be technical, here's a more official definition:
- A homeowner is 'short' when the amount owed on his/her property is higher than current
market value.
- A short sale occurs when a negotiation is entered into with the homeowner's mortgage
company (or companies) to accept less than the full balance of the loan at closing. A buyer
closes on the property, and the property is then 'sold short' of the total value of the
mortgage.
For homeowners to qualify for a short sale, they must fall into any or all of the following
circumstances:
- Financial Hardship – There is a situation causing you to have trouble affording your
mortgage.
- Monthly Income Shortfall – In other words: "You have more month than money." A lender
will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – The lender will want to see that you do not have significant liquid assets
that would allow you to pay down your mortgage.
This seems simple enough, but it is a complicated process that takes the expertise of experienced
professionals. I hold the CDPE® Designation and am ready to identify all possible options and, when
possible, assist in the quick execution of a short sale transaction.
If you have questions or feel you may qualify for a short sale, please contact me for a free
consultation.
Understanding your options now could mean all the difference in the world.
