The basic answer to what is a short sale is a short sale is a property that sells for less than the balance owing on its mortgage. A short sale can be an underwater home, an apartment building or even vacant land. If there is a mortgage balance that is greater than the market value of the home, that property is a short sale.
A Short Sale is a Privilege, Not a Right
Not every property qualifies as a potential short sale in a bank's eyes. A bank must agree to grant a short sale. Banks are under no obligation to approve a short sale. Banks will grant a short sale if the bank feels it is in the bank's best interest to approve the short sale.
It is in the bank's best interest to approve the short sale if the bank will make more money through the short sale than to foreclose. It is estimated that banks might save 25% to 30% on foreclosure costs to grant a short sale over a foreclosure, but some investor guidelines make it more profitable for the bank to foreclose.
What is Necessary for a Short Sale?
Most short sale transactions are handled by real estate agents who specialize in short sales. There are 4 essential ingredients to a short sale; however,strategic short sales, those without a hardship, are also possible. What makes a short sale work are the following:
What Role Do Real Estate Agents Play in a Short Sale?
Some real estate agents throw homes on the market that will never close as a short sale. That's because the agents do not always qualify the short sale sellers. Some agents place unrealistic price tags on the short sale, which the bank will never accept. It is wise to choose an experienced short sale agent who has closed at least 100 short sales. Here is what an agent does in a short sale:
Sellers should always get legal and tax advice before completing a short sale KNOW YOUR OPTIONS!!!!
ARTICLE BY ELIZABETH WIENTRAUB