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What is a Short Sale?

The running joke in real estate is “Why do they call it a Short Sale if it takes so long to close?”. Great question, seeing as how there is not much that is “short” within the short sale process. The real name for a Short Sale is called a “Short Pay Transaction”. Simply put, the owner owes more on the loan(s) than the property is worth and the bank must agree to accept a short payment for the amount owed. In many cases there is more than 1 lender, all lienholders on the property must agree to the short sale terms. That includes 2nd mortgages, HELOC’s, MI(mortgage insurance) companies, etc. The process is a delicate balance of satisfying all parties involved in the transaction to allow the homeowner to sell the home and move on.

One question we get often is “Do all Short Sales close?”. The short answer is no. A large percentage of short sales do close, but for a variety of reasons some do not. Those reasons may include; the buyer walks away and the bank proceeds with the sale date, the seller is unwilling to accept the terms of the offer, the bank nets more by foreclosing, etc. Nobody has complete authority over the transaction, however, working with the right listing agent can greatly help your chances of success in finalizing the sale.

Short sales are complex and dynamic, and just like the world of real estate and banking today, the rules change daily and knowledge is power. Be sure you have a good understanding of how the process works and what to expect. For more info on Short Sales, see the pages for “Listing Your Home as a Short Sale” and “Buying a Short Sale Home”. We have the professional resources needed and can handle the entire process for you!