NWA Short Sale
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What is a Short Sale?
A short sale is a Real Estate sale where proceeds from the sale fall "short" of the balanced owed on the mortgage.
For example Homeowner A has a mortgage balance of $100,000 on their home. They are qualified for a short sale and can sell their home netting them $80,000. In this scenario they are "short" $20,000. The bank forgives the seller the $20,000 and the seller walks away from their home free and clear.
Many people ask why the bank would do this?
The answer is simply economics. In the above scenario the home has a market value of $80,000, regardless of who owns it. If you are unable to make your payment the bank has a few choices, but ultimately the bank needs the home sold as quickly as possible, at the least expense to them. If the bank chooses to foreclose on the property they have all the added expense of the foreclosure process (approximately another $20,000) and they can still only sell the home for the marke value of $80,000.
What are the other advantages to the bank?
Most of these lenders already have good number of foreclosed properties and they don’t want to increase the number. Leaving an empty property is again not a good choice because empty properties can have damages, fire and natural disaster by which they can lose everything. Lenders also have to maintain the property with expenses such as utilities, yard work, and other miscellaneous expenses, not to mention the extra staff they have to employ just to deal with all their foreclosed assets.
At the end of the day short sales are a great alternative to foreclosure for all parties involved.
A short sale is a Real Estate sale where proceeds from the sale fall "short" of the balanced owed on the mortgage.
For example Homeowner A has a mortgage balance of $100,000 on their home. They are qualified for a short sale and can sell their home netting them $80,000. In this scenario they are "short" $20,000. The bank forgives the seller the $20,000 and the seller walks away from their home free and clear.
Many people ask why the bank would do this?
The answer is simply economics. In the above scenario the home has a market value of $80,000, regardless of who owns it. If you are unable to make your payment the bank has a few choices, but ultimately the bank needs the home sold as quickly as possible, at the least expense to them. If the bank chooses to foreclose on the property they have all the added expense of the foreclosure process (approximately another $20,000) and they can still only sell the home for the marke value of $80,000.
What are the other advantages to the bank?
Most of these lenders already have good number of foreclosed properties and they don’t want to increase the number. Leaving an empty property is again not a good choice because empty properties can have damages, fire and natural disaster by which they can lose everything. Lenders also have to maintain the property with expenses such as utilities, yard work, and other miscellaneous expenses, not to mention the extra staff they have to employ just to deal with all their foreclosed assets.
At the end of the day short sales are a great alternative to foreclosure for all parties involved.
What is a Short Sale
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