Anatomy of a Short Sale

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Anatomy of a Short Sale

Tuesday, October 13

A short sale is the selling of property to avoid foreclosure, the catch being that the property is being sold for less than the amount owed on it. What makes a short sale tricky is that the sale price is not up to the seller, the lender has to agree to the purchase price. The home owner isn’t walking away with any money at closing in the case of a short sale so he doesn’t care if the home sells for a dollar, the bank’s involvement is to reduce their loss as much as possible and the buyer just wants a bargain.

The basic process of a short sale is:

Borrower must be in arrears on loan payments
Borrower or broker contacts lender to discuss the possibility of a short sale
Potential buyer makes offer, knowing what is owed by borrower/owner of property
Lender reviews loan and offer
Borrower has to show/prove financial hardship
Lender and broker discuss value and condition of property and examine any offers
Lender makes final call

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The short sale process looks easy on paper, follow the steps and the deal is done, short sale completed. However, in reality the communication between the borrower, lender, Realtor and potential buyer is complex and time consuming. Simply wanting a short sale won’t make it happen. Using a CDPE (Certified Distressed Property Expert) eases the pain and insures you better success when trying to complete a short sale. Being in financial stress is not easy on anyone and using an expert will help you get the job accomplished in a more timely manner and help create a successful real estate transaction.

As investors seek properties at discount properties, they too can take advantage of the short sales in today’s Philadelphia real estate market.