What Exactly is a Short Sale?

A homeowner should consider a Short Sale when the value of their home is less than the amount of their outstanding loans. For example, if your home is worth $150,000 but you have a loan of $250,000 then a short sale is a consideration. This would only be used when necessary. If you do not have a pressing need to sell your home, you would want to wait on the market and for future equity buildup.

However, if you no option but to sell, for whatever the reason may be, from having to move to not being able to afford your payments, and you have no equity, you simply have three options.

First, you can bring cash to the table. If you owe $150,000 and your house is worth $145,000, this might work for you. In this case, you would just need to bring $5000 to closing plus the real estate commission. However, if you are in a situation like the one mentioned above, you would sell your home for $150,000 and still be liable for another $100,000 to the lender plus the other fees.

Second, you could let the home go by not making payments. It in turn would go into foreclosure. The lender will take the time to go through the foreclosure process, then force you and your family on to the street and then sell the house off, usually by first listing it with a real estate agent, and if that does not work, then by auctioning it off.

The third, and most viable option to most, is to pursue a short sale. You work with a knowledgeable team that lists your home on the open market and then aggressively works to make sure it gets an offer at current market value. They approach the lender, explain the circumstances and show them why it is in their best interest to less than full amount that is actually owed them.

Again, using the above example, we show them that we have a buyer that has come forward and made an offer at the $150,000 price, and because this is current market value, it is highly unlikely that anyone will offer a higher price. After much negotiating, we once again show them why they are financially better off to accept $150,000 for their $250,000 loan. After approval, we then proceed with a short sale.

The short sale option works many times, however, it is imperative to work with professionals who understand what they are doing and how this current market works, or the short sale will be unsuccessful, and foreclosure will come looming upon you once again.