Have You Seen This?....and Wondered? Subject to Short Sale Approval ( Part 1)

The subject of  "Short Sales" is always coming up.   We are asked what it means, how and why it's done.

The nutshell answer...

when the sale proceeds are less than the money owed to the lender of the property, and the lender releases the owner of his obligation to pay the entire debt so that the owner can sell the property, we call it a "Short Sale".

For example....

the owner of a property owes a lender (or two) a total of $300,000.    Current market value on the property is $250,000.    if they don't have $50,000 plus closing costs, they can not sell and satisfy the liens on the property.    

So, in order to avoid foreclosure, the owner may put the property up for sale for less than he owes, procure an offer and submit it to the lender(s) with a request that he be released of his obligation to pay the entire debt.

The lender may agree to this to avoid the foreclosure as well.   Why?   Foreclosure is costly to them and they will likely only get market value anyway.   

With a short sale, the seller must have the lender's approval to convey the property.    If the lender does go along with the process, it saves the seller not only the cost, but the embarrassment and emotional drain of a foreclosure... there maybe less credit damage as well.

If you have questions, contact me...we have plenty of experience and success on both the selling and buying side of short sales.

next - 

Part 2     Selling your Home - Is Short Sale YOUR Best Option?
Part 3     Buying a Short Sale - Is it for You?