A short sale in real estate is defined as a home or property that the proceeds from the sale are less than the balance owed to creditors and closing costs when sold.
In a short sale the bank or mortgage holder(s) agrees to accept less than the balance due at closing. A short sale is typically caused by some sort of economic or financial hardship on the part of the mortgagor (home owner).
Short Sales are most often executed to prevent a home foreclosure and must be approved by the lender or bank. For the seller a short sale prevents them from having a foreclosure on their credit. The short sale is not as damaging to credit as a foreclosure, but I would advise any seller thinking of a short sale to seek legal counsel first and to seek all options before deciding which option is best for them. But for the home owner that decides to sell their home as a short sale and has tried to work things out with their bank to no avail finding a buyer to write an offer may be their best option. This is usually accomplished by listing the home for sale through a real estate broker or sometimes investors actually contact the home owner in an attempt to purchase the home at a large discount.
For the banks a short sale is typically faster and less expensive than a foreclosure. A short sale can actually be a win/win/win for the home owner, the bank and the purchaser of the distressed property. In this recent analysis of Eugene home sales comparisons, short sales on average are selling for less price per square foot than bank owned REO’s.
Real Estate Short Sales – Is This For Everyone?
The quick answer is, no! Unless there is some sort of hardship for the seller that prevents them from being able to make their payment, banks will not necessarily entertain short sale offers. Part of a short sale package include a hardship letter from the owner. Some very basic questions that a home owner might ask themselves:
- Are you behind on your payments?
- Do you owe more than your home is worth?
- Have you or your spouse lost your job, fell ill, or lost a loved one?
- Has your “ARM” adjusted and you can not keep up on your payments?
- Have you considered just walking away and not owing a dime?
A short sale should be handled by someone experienced in working with them. They are complicated and if not handled properly are more likely to fail and the home ends up being foreclosed and going to auction.
What Steps Should I Take To Pursue A Short Sale?
If you are considering selling or purchasing a short sale, we would be happy to assist you and go over the process in more detail if needed. Short Sales are not for everyone, but knowledge is power so don’t hesitate to contact a local real estate agent today. My recommendation would be:
Dennis Pease / Broker
RE/MAX Integrity
4710 Village Plaza Loop, Suite 200
Eugene, Oregon 97401
(541) 844-9287
