What Are Short Sales?

Many of you may have heard of the term "Short Sale". However, you may not have a clear understanding of what it is. A short sale is a sale of real property where the proceeds of the sale fall short of the balance owed on the loan that secures the real property that is being sold. For a short sale, the lender agrees to discount the loan balance due to a financial or economic hardship of the homeowner. In many cases, the homeowner will authorize a Realtor to handle the negotiations for them with the lender. The negotiation is done through discussions with the lender. Most lenders have a special department to handle these negotiations and it is usually called the loss mitigation department. A buyer is obtained for the real property and the sale must be approved by the lender of record if it is for an amount that is less than the balance owed on the loan. Circumstances usually determine whether lenders will discount a loan balance. These circumstances are usually related to the borrower's financial situation and the current real estate market.

A short sale is usually obtained to keep a home from going into foreclosure. However, the lender's decision to proceed with the short sale is based upon whether the lender believes that this procedure is more cost effective than allowing the home to go through foreclosure. With foreclosure, there are holding costs, possible vandalism and extra time to market and close the sale. Moreover, with short sales, the homeowner usually remains in the home until closing and the time period from beginning to end may be shorter.

Harold Avent, CRS, CRB, GRI, e-PRO

REMAX Execs

310-493-0711

Harold@HaroldAvent.com

www.HaroldAvent.com

Torrance, Ca. 90505