The term “short sale” refers to a home or other property that is going to be sold for a price that’s less than what’s currently owed to the lender. Therefore, the sale comes up “short” on covering the total amount due to the lender, which is how the transaction came to become known as a short sale.
A short sale typically involves a distressed property — a home or other property where the owner can no longer afford to pay the mortgage payments. As a result, they may be facing imminent foreclosure and loss of the property.
The bank or other lender must approve a short sale offer before the sale is permitted to proceed. Generally, the soon-to-be-former property owner is released from further obligation to the lender once the short sale is approved, although this is not always the case. There are a small number of cases where the borrower may be required to repay a portion of the balance. But this freedom from financial obligation is the primary benefit of a short sale; it allows the borrower to move on – something that could not be achieved in the foreseeable future in cases where the individual owes significantly more than what the home is valued at.
Short sales are typically performed in a very prompt manner. The haste with which these real estate transactions are performed results in a sale price that’s typically significantly less than the property’s actual market value. Therefore, many investors will purchase short sale properties, which are then re-sold as-is or repaired and upgraded prior to sale in what’s known as a “fix and flip” transaction.
Notably, there are some financial incentives available to property owners who opt for a short sale. In addition, the soon-to-be-former property owner sees less damage to their credit history when opting for a short sale instead of a foreclosure, especially if the short sale is performed before the borrower misses a payment.
If you’re seeking to sell your home as-is to an investor or in a short sale transaction, turn to Kristine Zelazo, the Short Sale Gal! Complete the home pre-sale form to provide Kristine with additional information on the property in question.
Contact Kristine Zelazo by phone at 800.664.0616.