Short sales are a part of our market in a BIG way and it looks like they will be for quite some time. So what is a short sale?
Here is the common definition of a “short sale”. The situation is this. Someone (we will call them the “owner”) purchased a home and financed it through a bank (we will call them the “lender”). Or, another possibility is that the owners took out a home equity line of credit (referred to as a HELOC) The sellers likely lived there for a time and thought all was well. Until our market went SOUTH and they either lost a job…took a decrease in pay…or had some other life altering situation that caused them to have to move.
At this point the owner realizes they have to sell their home. These folks are asking the lender to accept a discounted payoff on their loan. This is called a “short sale” or a “short payoff”.
This is an emotional time for them. Then…they call their favorite Realtor in to talk about the sale. This is the point that it becomes clear just how dire their situation really had become. They owe considerably more than the house is worth. The answer? Ask the bank to take less than what is owed and allow the sale. This is now a “short sale listing”.
Are you a canidate for a short sale? Well…in the recent past I would have told you you need a VALID hardship to be considered for a short sale. Today, however, I have seen short sales approved when the sellers’ can afford to stay in the home. With SOME BANKS…it is simply the number making sense to them. If they will net more from a short sale than they think they can net if the home owner chooses foreclosure…they will look at the deal….and maybe accept it.
Read here to understand more about the typical short sale scenario.
