SHORT SALE PRIMER

WHAT IS A SHORT SALE?

A short sale is when a seller accepts an offer on his home for less than the sum of what is owed on it, plus the seller´s closing costs.  The sale is then subject to the seller´s lender (the lien holder) agreeing to a reduced payoff of the current mortgage.

Example:  A seller accepts an offer on his home for $200,000.  He owes $220,000.  In addition, his closing costs come to $14,000.  For the sale to be completed, the seller´s lender must agree to accept the $200,000, less the $14,000 ($186,000) as the total payoff on the current mortgage.

IS THERE ANY COST TO THE SELLER IN A SHORT SALE?

As a rule, the lender absorbs all the sales costs, including real estate commissions (Note: lenders sometime will not pay for delinquent utilities).  Dee Schwindt does not charge sellers a fee for negotiating a short sale.

WHY WOULD A LENDER DO THIS?

Lenders want to avoid foreclosures.  The foreclosure process itself is costly.  When the bank takes over ownership of a property, it needs to maintain it and also go through the expense of selling it.  And the bank will get no more from selling the property than if it had accepted a reasonable short sale offer.

WHY DO PEOPLE DO SHORT SALES?

Sometimes people find themselves in situations where they must sell their homes.  Maybe there has been a significant change in their financial situation, and they just can´t make their mortgage payments anymore.  There may be a job transfer or loss, medical problems or a divorce.

WHY NOT JUST LET THE HOUSE GO BACK TO THE BANK?

A short sale may be less damaging to your credit than a foreclosure. You may be able to purchase another home in the future sooner that if you let the home go back to the bank. For most people, a short sale is certainly is less emotionally upsetting.