What’s A Short Sale?

With so many Short Sales on the market it is best to know how they got there and why?

A question I consistently get from my clients, more so buyers than
sellers is what is a short sale? What does it mean when a property is a short sale?
Well the definition of a short sale is the sale of real etsate or the sale of property in which the proceeds fall short of the amount owed on the property’s loan. In most cases this happens when the home owner can no longer afford to make any payments on his mortgage. The lender will ultimately approve the short sale, take the loss instead of going through the foreclosure process.
Now you’re probably wondering why would they do that? It’s simply a business transaction, looking at the bottom line, how much is it going to cost them.
There are many costs associated with foreclosure so they would rather sell the property today at fair market value then pay for the expensses to foreclosure on the property and later have to sell the property at the either the same price or perhaps lower depending on how the market is looking. Looking at that, it makes sense for lenders to cut their losses and approve the short sale.
On the homeowner side why would a short sale be beneficial? They are avaoiding foreclosure, their credit score isn’t severely impacted… in many credit appliaction the question of foreclosure is present, check no.
Are there any restictions for a short sale? Can anyone do a short sale?
There has to be a viable reason to do a short sale. Lenders aren’t stupid and will not check off and approve you.

Some reasons include: Divorce, loss of employment, death, and many cases I’ve been seeing is adjustable rate mortage.
The interest rate resets and your mortage payment go up making it unaffordable.