Have you ever wondered what a Short Sale is?

A short sale is a negotiated settlement between the property owner and the lender, where the lender agrees to take less than they are owed for their first mortgage. This enables the owner to get out from under the mortgage and move to a more affordable home while preserving at least some of their credit.

Why should people choose to sell their home as a short sale?

Some do it to avoid foreclosure, some get transferred and it is their only option to sell the property and some do it for strictly financial reasons. When the home is worth less than owed it may take many years until that home appreciates enough to recuperate the loss. And in the meantime you are paying x-amount of dollars a month more than your neighbor is paying for the same home.

So what is the difference of a Short Sale vs. Foreclosure…

Short Sale                                                                                         Foreclosure

Fewer legal costs                                                                            more legal costs
Greater recovery ratio                                                                      recovery of a lesser amount
Fewer non-performing loans                                                        more non-performing loans
Lower reserves                                                                                higher reserve requirements
Existing loans more marketable to secondary markets          possible negative impact on salability of existing loans to 2nd markets 
Fewer REO marketing costs                                                         more REO marketing costs
Problem solving perception by public                                         negative perception by public
Fewer repairs likely possible                                                        extensive property repairs
Greater marketability of property                                                  marketing challenge of extensive inventory 
Likely greater value from Broker price opinion                          likely lower appraisal price
Less negative impact on neighborhood                                     can have negative impact on neighborhood and community