Question: What is a “shortsale”andwould that help mesell myhouse?
Answer: Ashort salein real estate takes placewhen the lender(e.g., bank,Mortgage Company)agrees to accept lessthan the remainingbalance on themortgage owedbythecurrent owner ofthe property. Wehear moreabout thesetypesofsales todayasa resultof stressfuleconomicconditions includingadropin the value ofhousing pricesin manycitiesacross thecountry.
Whywould alender agree to accept a shortsale? In most cases the lenderwill savemoneyover thecosts offoreclosingon the property even thoughtheywill still losemoney. For the owner ofthe property, who is likelybehind or“upside down”on themortgage, meaningwhat is owed on the propertyisgreaterthan its currentmarketvalue,ashort salemaybeless damagingtotheircreditratingand the sellermayqualifymorequicklyfor anew loan. Ifthe propertygoes to foreclosure, it maybeharder for theformerowner to find awillinglender on another property.
In orderforyour propertyto qualifyfor ashort sale:
You must demonstrate,throughcomparisons withsimilarproperties,thatthe value ofyour propertyhas dropped;
Youmust show thatyouarecloseto havingto default onyourmortgagepayments;
You must attest, in writing,thatyou have “fallenonhardtimes” throughsuch things as unemployment,divorce or medicalemergency;
You must not haveanyassets (e.g.,investments, cash, and otherproperties)thatthe lendercould point to as asource for meetingyourmortgage payments.
You have a qualified buyer willingto accept theshort sale;
Thelender must agree tothe shortsale. Lendersmayagree to the actual shortsalepriceorofferanagreementforyou to makeup the differenceatsome laterdate.
Therealestate industrywascaughtsomewhatunprepared forthevolumeofshort salesthat have occurredover thelast 18 months. TheObamaadministration,recognizingsome ofthe challenges oftheseconditions,has proposed guidelines that would increasethe incentives to sellers and lenders to work out ashort saleand to speedup the process.
Beforeagreeingto listyour home for short sale, besureto check with an attorneyoraccountant to determinelegal or taxissuesyou need to know about before acting.
Short salesare aspecialized form ofa realestatetransaction. Work with aqualifiedandknowledgeable REALTOR® with experience inshort sales to make sure all of theelements of the transaction takeplace properly.
ThisarticlewasprovidedbytheColoradoAssociationofREALTORS®.Additionalinformationaboutbuyingandsellingrealestateisavailableat