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What is a Short-Sale Property?

A short sale is when a mortgage lender agrees to allow your property to be sold for less than it's actual market value. The lender will discount a mortgage balance to give the you the owner an opportunity sell the property and turn over the proceeds to fully satisfy an outstanding loan balance. In this instance, the lender has complete control whether to approve or disapprove the sale.

Most often, the lender will approve a short sale if the property manger owes more than the current market value, also called being "upside down." Another reason for the lenders to do this, is to avoid foreclosure. Avoiding foreclosure can be a wise decision for the lender if the person in charge of the house has encountered a serious financial hardship or more importantly, if getting this done will result in a smaller financial loss than through the foreclosure process. Also, have one done to your current property is a better option for the owner for a number of reasons. First, even though this will show up on a consumer credit report, it is far better than a foreclosure. A foreclosure creates a long-lasting back mark on your credit report and will drop the person's credit score approximately 300 points. Also, the process is somewhat faster and less expensive than a foreclosure creating a superior choice if the market has softened.

While you might think that putting yourself through this it is an easy way out of an "upside down" property investment, lenders will not even consider a short sale until a notice of default has been issued and a valid reason has been presented to the lender. Typically, the lender will go over the home owner's situation very thoroughly before approving you for this type of procedure. A loss mitigation department will asses the situation and do data analysis before approving the sale. Most often there is a hefty amount of negotiating before a sale is final to ensure the lender is fully satisfied.



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What is a Short-Sale?


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2795 E.Bidwell Street  #100-144  |  Folsom, California 95630
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John@JohnLeonardi.com
John Leonardi Real Estate Services
Serving the Greater Sacramento Region since 2000

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