Short Sales

Most people are familiar with the term “foreclosure” and have a good idea of what it means. However, the term “short sale” is new to most people, including many real estate agents. A homeowner is “short” when he owes more on the property than the property is worth. A “short sale” is when the homeowner’s mortgage company agrees to accept less than the full amount owed on the mortgage at closing. A buyer closes on the property, and the property is “sold short.” Here is an example:

Bob purchased his home for $400,000 in 2006. He recently lost his job and can no longer afford the monthly mortgage payments. He contacted a realtor to list his home for sale. Based on a market analysis of his home, the realtor informs Bob that there have been 3 foreclosures on his street this year alone, and those have sold for an average price of $300,000. His realtor suggests $299,900 as a list price for Bob’s home. Bob owes $375,000 and does not have enough money to cover the loss.

Fair Market Value of Home	-	Amount Owed on Home	=	LOSS
$300,000	-	$375,000	=	-$75,000

Bob explores his options and decides to list his home for sale as a short sale. His realtor, a CDPE, markets his home, assists in the negotiation with the buyer, and ALSO handles the negotiations with Bob’s bank. A few months later, Bob closes on the home, avoids foreclosure, salvages his credit, and can move on with his life.

A short sale is one of a few options potentially available to distressed homeowners as a way to avoid foreclosure, and in many cases, it is the best option. Fill out the form below and we will contact you to help you evaluate your options and help you decide which option is best for you.