Understanding Short Sales

Did you know?   A "short sale" results when the seller's net proceeds from the home sale are not enough to cover the mortgage obligations and closing costs, such as property taxes, transfer taxes and the broker’s commission.

There was a great article in the September 2007 issue of the Florida Realtor magazine.  The author is Richard Westlund --a Miami-based freelance writer. Here are a few brief excerpts from the article.  Short
sales can be a win-win for both the buyer and the seller.  The buyer
gets a great deal and the seller is relieved of financial strain generally
with his or her credit unharmed.

Click on the magazine cover to the left to read the full article.

Rising Trend

Throughout Florida, the number of sellers facing financial difficulties is clearly on the rise in all price brackets. Many owners holding adjustable rate mortgages (ARMs) or interest-only loans are finding it tough to keep up with today’s higher monthly payments. Rising foreclosure rates throughout Florida and the rest of the country signal the seriousness of the problem.

At the same time, a decline in sales prices over the past two years has left some sellers with little or no equity in their homes—sometimes called an “upside-down” sales situation.

Is It a Short Sale?

Just because sellers are behind on their mortgage or are having financial difficulties doesn’t mean that the property is automatically eligible for a short sale. Your first clue is the market analysis compared to the mortgage amount. But, it’s vital to work with sellers to get an estimate of the net proceeds and then discuss options.

Working with the Lender

To request a short sale, the owners typically present the lender with evidence of financial hardship and a current market estimate of the home’s value. Any potential sale is contingent on the lender’s approval.

If the property you are interested in is a Short Sale, I can help keep you well informed throughout the process.