What is a Short Sale?

A Short Sale (also known as a Short Payoff) is when lenders accept a discounted payoff on an existing mortgage to allow an over-encumbered property to be sold. In other words, when a homeowner owes more on their property than can be collected through a real estate sale, a Short Sale allows the homeowner to sell their property to avoid a foreclosure on their credit. We educate you and the Client regarding the process and time lines of default, foreclosure, and Short Sale.

Contrary to popular belief, lenders do not want to own your property; they simply want to recapture a respectable amount of their original investment. A Short Sale may be the Real Estate industry's best kept secret. Thousands of people have simply walked away from their properties in deflated Real Estate markets because they did not know their options. Don't be one of these people.


What are the Benefits of a Short Sale?

The benefits to homeowners:

  - Homeowners can avoid foreclosure and the embarrassment of eviction.
  - There are usually no up front costs or out of pocket expenses to close escrow.
  - Homeowners closing a Short Sale avoid the damaging effects of foreclosure on credit reports.
  - You can even stay in the property during the Short Sale process at no cost.

The benefits to lenders:

  - A Short Sale is a more cost effective solution to a lender than a foreclosure.
  - Short Sales allow lenders to limit their percentage of foreclosed loans to meet investor guidelines.
  - Lenders don't have to evict the homeowner, rehab the property, or market the property for resale.


Don't be discouraged if your client's hardship doesn't seem monumental. There are many acceptable hardships related to not being able to keep a property.

Some common questions about Short Sales.

Q: How do the homeowners qualify for a Short Sale?
A: In order to qualify for a Short Sale, they will normally need to be able to prove that a hardship exists.

Q: What are acceptable hardships?
A: - Inability to make mortgage payments
     - Unemployment
     - Reduction of income
     - Job relocation
     - Serious health issues
     - Medical bills
     - Separation
     - Divorce
     - Business failure
     - Numerous other acceptable hardships

Q: How much time do they have?
A: It takes approximately three months from the recording of a notice of default to complete the entire foreclosure process. Sometimes starting a Short Sale can postpone the foreclosure process long enough to complete the Short Sale. We will educate you further regarding the process and time lines of default, foreclosure, and Short Sale.

Q: How long does it take to get an answer from a lender after a buyer makes an offer?
A: Depending upon the specific Short Sale, lender, and transaction, it is between 1-8 weeks. 

Q: Why does it take so long to get an answer from the lender if its in their best interest?
A: They are overwhelmed and not prepared to handle the volume of Short Sales they have to deal with. We are seeing more accepted within the first week than previously. It depends upon the specific lender.

Q: What can we do to help speed the process up?
A: Have your clients submit all documents to us immediately.

Q: How do we keep a buyer interested in the process for that long?
A: Communication; Explain the process to the parties, give weekly updates, and reiterate to the buyer that they are getting a good deal. Be sure to remind the buyer's agent to remind their buyer that there will be great value.

Q: How much will this cost me or my client?
A: There are no up front costs or out of pocket expenses to close escrow.