Pacific Northwest Real Estate
What Is a Short Sale?
Let’s start with a basic definition of a short sale. A short sale (also known as a “short payoff”) occurs when a lender or lenders accept a discounted payoff on an existing mortgage. Generally, they agree to minimize—and sometimes completely eliminate—closing costs for the homeowner in order for the bank to avoid the costs and hassles of foreclosure. In other words, when a homeowner owes more than can be collected through the traditional sale of their property, a short sale allows them to sell the property before it gets foreclosed upon, thus lessening—and in some cases, eliminating—the negative impact on the individual’s credit rating.
In many cases, this is an attractive alternative for Pacific Northwest homeowners who are at risk of foreclosure on their homes, with much less severe consequences for their credit. There is a specific set of guidelines for Short Sales and they must be followed closely.
Short Sale Guidelines
- You must be behind in payments and in most cases the property is in danger of foreclosure.
- Documentation must show that you cannot continue to make the payments on their mortgage. A financial hardship statement is usually required to explain the reason you are unable to pay. Examples of financial hardship include: loss of a job, medical expenses, or death of a spouse, just to name a few.
- You must make efforts to put the home on the market with a full service real estate firm at its full value, and sales activity must be recorded in detail.
- If the lender approves a short sale, a suitable buyer is found, and the price is approved by the lender, the sale process continues as usual.
- There are consequences for your credit, but in most cases they are much less severe than if the home is foreclosed on.
Most of the time, the lender will pay almost all of the seller’s fees and commissions related to the sale. In cases where you only have one mortgage, you may walk away without owing anything — though you can’t profit from the sale.
Short Sales can be difficult without experienced guidance — the whole process can take anywhere from 4 months to a year. Turn to the Susan Stecher team of Pacific Northwest real estate experts to make this time much easier for you and your family!
***Susan Stecher is a Certified Distressed Property Expert - CDPE, Specialized Service Provider – FSSR, in Foreclosures, Short Sales and Bank-Owned Properties, a Short Sale & Foreclosure Resource – SFR and a Certified Short-Sale Professional – CSP. Call today for a confidential consultation to determine what your best options are to avoid foreclosure — call direct at (360) 319-4939, or toll-free at (888) 319-4939.