What is a Short Sale?
Everybody wants to know what a short sale is and there seems to be some confusion on the subject. I asked a few folks what a short sale is and I got varied. Lets explain what this really is.
You bought a house, a commercial property, an investment property, or maybe even a piece of land. Your borrowed money to buy the piece of property and took out a mortgage. Now the real estate market crashed. Insurance went up, taxes went up. You may have lost your renters, your job, and for whatever reason you can’t afford to make the monthly payments.
Now the property is worth less than you owe the bank. A short sale is when you ask the bank to accept less, allow you to sell your property and still discharge the mortgage and let you off the hook for the remaining balance. If the lender agrees to it, thats a short sale.
people do it all the time. We’ve been doing it since time began. If I lend you $100 dollars and you don’t pay me back for 6 months but show up on my doorstep and offer me $80 and tell me thats all you have. Am I going to take it? Of course I am. I know if I don’t take that $80, I’m never going to get my money back.
And this is precisely the position a lot of these lenders are in right now with mortgages. This is the toughest real estate market in the history of modern mortgage lending. Foreclosure rate is at an all time high and the lenders don’t know what to do. The bank knows they might only recover 40 or 50 cents on the dollar if the property goes into foreclosure. No one is buying foreclosures on the courthouse steps. They’re going to hold the property, pay the taxes and insurance and maintenance for how long?
Make them a short sale offer. Even though its more than you owe, its still might be a great deal for the bank and they might be willing to do it. So, don’t give up, try a short sale if you’re upside down on your property with no way out.
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