In real estate, what is a short sale, and how do they work?

Answer 1

I'm closing on a short sale so this is coming from experience.

A short sale is when the seller owes more than what the property is worth. Selling a property short is not as easy as you might think. Your real estate agent would first have to advise the buying party that the lender will need to approve the offer. Also, most buyers and their agents prefer to sell homes which are not sold short. This means a property would have to be reduced to a price where it would spark the interest of agents who would take that chance of writing an offer on a short.

Hope that helps.

Answer 2

A short sale is asking the lender to accept less than what is owed to them in order for the owner to sell the home. A lender will do so if they see that the owner is unable to pay out of pocket the difference due to some type of hardship and it would make sense to sell this property at a loss than to continue with the foreclosure process. How it works is too much info to put in here. This book gives great info: ISBN 0471760846

Short sales are not difficult to do, just time consuming. I charge extra to do them.

Regards

Answer 3

This is where the seller owes too much to do a "traditional" sale. Traditional being - buyer buys house, title company pays off the seller's loan, all the seller's expenses out of the proceeds.

Note that lenders do this usually INSTEAD of foreclosure. They don't do it just because the seller would like to move to another house, or because an investor would like to get a lower price.

Also, once the HUD-1 is prepared, the lender will look at what net is being offered them. At that point, they may tell the Realtors to do whatever it takes to get them more money.

Haven't done one myself, but have witnessed two. One closed, the other got foreclosed upon.