What is a Short Sale?
A seller has to short sale a home the sales proceeds are not sufficient to pay the mortgage in full at closing. In other words, a seller is "short" enough money to pay the mortgage after a sale.
When a buyer gets a loan to buy a home there is a "Note" and "Trust Deed." The "Note" says the homeowner has borrowed money, and must repay it through monthly payments. The "Trust Deed" says that the home will be the collateral for the loan. The "Trust Deed" says "Pay you stay, don't pay you won't stay." The "Trust Deed" is like a lien on the home; the home cannot be sold until the lien is satisfied and the loan is paid in full.
Recent history has seen home values plummet below the mortgage, "Note" value. Plus some home owners have variable interest rate which are automatically raising the monthly payments, and still others are loosing their jobs required to make the payments. All these issues have required many home owners to consider "Short Sales."
Homes offered for "Short Sale" are still owned by the homeowner. Sometimes these are called "Pre-foreclosures" when bank has initiated but not completed the foreclosure process. When a seller accepts a buyer's offer to purchase their home for less than the amount due on the loan that is a "Short Sale." Then the bank reviews the offer and decides rather to accept the offer. The bank's review process is to determine whether they would be better off taking the proposed loss or to foreclose on the home, and selling it themselves. This is normally a lengthy and complicated process and requires many months of negotiations. The assistance of a Realtor can greatly improve the opportunity for success for both the seller and the buyer.
For more information on buying or selling a "Short Sale," please contact Jim Marrs anytime at 702-354-3479.
