What is a Short Sale?
May 8, 2010
The downturn in our economy has brought about a large number of properties that are not worth what they were a couple of years ago. Many people have lost their jobs or have had to take pay cuts and can no longer continue to pay the mortgage. The term ’short sale’ has come to be a situation where the homeowner, working with the mortgage company, sells the house for less than the remaining balance of the mortgage.
Most mortgages are held by investors and serviced by the mortgage company. The investor is taking a ‘hit’ on the interest they were scheduled to earn over the life of the mortgage. The alternative to agreeing to sell the loan short is to take the house and mortgage into foreclosure. If a loan goes to foreclosure, everyone is likely to suffer a greater loss than if the mortage is sold ’short’. The homeowner’s credit is damaged worse with a foreclosure than if a short sale is worked out. Properties marketed as short sales take a longer period of time to close, due to the process of getting all parties to agree on the final sale price and costs associated with closing the loan.
There are several options to sell a property that have not been conventional over the longer period of time. Consult with your real estate professional to determine what is the best way to sell your home.
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