Short Sale Information

What is a Short Sale?

A short sale, in real-estate terms, is the sale of a house for less than what the owner still owes on the mortgage. If the lender agrees to a short sale, the rest of the homeowner’s debt typically is forgiven. Lenders sometimes agree to the procedure in order to take a small loss and avoid the lengthy and costly foreclosure process.   Here is a quick example:

Current market value of property : $200,000

Current first mortgage: $325,000

Current 2nd mortgage: $50,000

In this case obviously there isn’t enough from the sale to payoff or satisfy the first or second lien (bank) holders.  So we would work along side the bank and try and negotiate a reduced amount or payoff in order to close the transaction.  It is important to know that I try and keep your out of pocket expenses to a minimum or in most cases $0.  When we submit and offer to your bank (along with any other required documents) we included fees such as-Back Payments & Penalties, Home Owners Insurance payments, Delinquent Taxes, Title Fees, Real Estate Commissions ect…as Bank Expenses!  In some cases the bank will come back and counter our offer with the banks acceptable terms..at that point we can renegotiate until we hopefully come to mutual agreed upon terms. 

Short sale: Win-win-win situation

The beauty of short sales is that they can be a win-win-win situation for seller, buyer and lender. Here’s how: 

  • The seller gets out of the mortgage liability without facing bankruptcy.
  •  The buyer gets the home at a reduced price.
  • The lender agrees to a loss it considers minimal without going through a foreclosure and being saddled with an unsalable property.

 While it may seem surprising that lenders would agree to accept less than what they are owed, they benefit from the process, too. 

The lender benefits by not having to go through the protracted process of foreclosing on the borrower and then having to put the property on the market and go through the whole marketing process. 

It is important to know that every Short Sale is a different situation.  Different hardships, loans, situations and bank requirements make the process very complicated.  I have been very successful in negotiating and closing short sales.  Please call me so we can talk and go over your options.  If needed I will come over at no cost so we can discuss it in detail.  My direct phone number is 925.584.7058

**I advise all of my clients to get professional tax advice by speaking to a CPA and/or Real Estate attorney.   Short sales often have tax repercussions, since lenders can claim the forgiven debt as income that they provided you.**