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What is a Short Sale Anyway?

An increase in foreclosure rates will inevitably bring with it an increase in short sales. But what is a short sale?

A short sale happens when you sell your house for less than your remaining mortgage balance, the proceeds of which go to the lender and in return the lender forgives the remaining balance. Selling your home as a short sale is one way to avoid foreclosure.

As a general rule, lenders lose money when they foreclose on a property. Consequently, they would rather not have to foreclose if it can be avoided. A short sale represents an opportunity to cut their losses because a short sale usually allows them to recoup more of the cost of the loan than a foreclosure process would.

However, don’t think that a short sale is an easy thing to accomplish. In order to get permission for a short sale, you must provide documentation showing a genuine financial hardship. And don’t think that the decision for accepting a short sale is solely in the hands of the lender. Sure the lender must first agree, but this is not the final word. If there is mortgage insurance involved, this company also gets input on the decision. If there is an investor backing the mortgage, they also get input as to whether to accept a short sale.

The transaction process for a short sale can be rather cumbersome as well, whether you’re on the buying or selling side. Many short sales fail due to additional demands by the lender, such as requiring the broker to reduce his or her commission and/or that the seller signs a document requiring him or her to pay back the shortfall.

If you’re on the selling side of a short sale, consider having your agent or other experienced professional negotiate with your lender for a better deal. And remember, if the lender does accept a short sale and forgives part of your debt, that is considered taxable income and you must declare it as such to the IRS.

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Faye Hunter, Broker
Century 21, The Hunter Group

114 South Main Street
Statesboro, GA 30458-1475
Phone: 912-489-5750
Email: fayehunter@realtor.com

Testimonials Page

I was very pleased with Jessica in every way. After our first meeting she started right away with selling my mom's house. I didn't have to worry about one thing. Jessica is an excellent agent. She is very personable but professional. I live out-of-state but she kept me well informed. She has a great personality. Jessica showed that she has morals and values which are valuable traits to me. I would definitely recommend her to anyone. The sale was very quick. You are very fortunate to have Jessica working for you. The process from beginning to end went very smoothly. Thanks to Jessica. Vicky Click,Southport, NC April 27, 2018
When you have a very patient friend who is also your real estate agent, you are doubly blessed! This entire process of prepping to sell and selling Mom's house was made much easier thanks to your guidance and patience - again, the "p" word. From letting me know what to expect, to determining what "fair" means, and all the other minute in between. I relied on your experience and advice. You did not once let me down. Thanks for not only being the trusted consummate professional, but for being a great family friend. Best always, Marianna Marianna Voiselle, February 6, 2018
Thanks for all your help in making our "dream home" a reality. We really appreciated that you went the extra mile to get us the best price for our home. You are truly a professional.
In all our dealings with Realtors over the past ten years, we have never met anyone as helpful and energetic as you have been. Without hesitation, we would highly recommend your service to anyone who is looking for an experienced Realtor who cares about getting things done and doing them right! Thanks for taking such good care of us, we couldn't have done it without you!
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