Home-Buddies

Holly Hooper ‘Decodes the Lingo’ on Short Sales

 Holly Hooper does an excellent job in her article decoding the often misused term ’short sale’. Many people mistakenly call purchasing a home below market value as a short sale. However, it is a negotiation process with the mortgage company where an investor arranges to buy the property for less than the remaining mortgage balance.

“…Short sale is basically selling a house for any amount less than is actually owed on the property and then asking the bank to write off the remainder of the loan as a loss.   An example:  A home purchased for $140,000 has dropped in value by $40,000, but the owner still owes $120,000 to the lender.  A short-sale specialist would pre-negotiate with the bank to accept a short-sale of the property for $100,000 and write off $20,000.   If the bank accepts and the agent finds a buyer at $100,000, then the bank doesn’t have to go through foreclosure and the owner has only a short-sale on their credit report (which is much better than a foreclosure).   A short-sale isn’t easy, but it can save the bank and the home owner significant damage if done well.  In the example above, the bank may be saving between 20 and 40 thousand dollars by not having to sell the property as a bank owned property. …”

When you ask us to do a short sale we are doing so in your best interest. This is why we say our short sale process takes three to six months. Since there is no mortgage payment during that three to six months, the longer you can stay in the home without payments the better off you will be when the house is sold.

Cliff Pape
Home-Buddies
(888)933-0332

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