What is a short sale? Generally, a property on the market qualifies for a short sale if it is worth less than the mortgages on it, and the seller is in distress and can't make the payments, and needs to sell before the lender forecloses on it. 

A lot of people are 'upside down,' if they compare the sales prices in their neighborhood with their mortgage balances.  But they love their home and can make the payments, and they plan to ride out the 'down' real estate market in their area.  This is similar to having company stock and holding on to it, even though it's value has dropped on paper......we hope that the value will rise again. 

But if a seller is in distress (has lost a job, has a major family illness, has gone through a divorce, or has other problems), the lender may let them sell the property for the best offer they get and consider the lien paid off.  Of course, this is a simplified explanation of the process.  The seller has to turn in a bunch of paperwork to the bank to document their reasons for requesting a short sale.  And the bank has to approve the short sale, generally after getting an offer to purchase. 

But many banks are choosing to sell through a short sale rather than foreclose on the property.  Foreclosure usually brings extra expense and risks to the lender, because a vacant property can fall into disrepair and be vandalized and bring lower values to the rest of the neighborhood.

Many experts believe that sellers take 'less of a hit' on their credit rating and score if a short sale, rather than foreclosure, is the method of disposing of the property.

Please forward this information to anyone you know who might be in a distressed situation.  We are training to better process short sales, as the national trends are that these sales will increase in 2010. 

Call us anytime to discuss your situation if you need to sell.  We will do a market analysis of your neighborhood to determine recent sales prices.  And we will be glad to walk you through the paperwork which most lenders require to approve a short sale if your sales price is likely to be lower than your lien payoffs, and you are in a distressed situation.