What is a Short Sale?

by admin on March 19, 2013

John Latham has been in the foreclosure industry for more than 20 years with his family’s foreclosure trustee business. He is also a Certified Short Sale Negotiator (CSSN) and a REALTOR® with Spinnaker Realty.

 

Brett: Hi I am Brett Adams, Broker of Spinnaker Realty.  I have with me again John Latham.  John is our agent that handles all of our Short Sales.  John, what is a “Short Sale”?

John: A Short Sale is when you sell a house for less than you owe on it… with the bank’s approval.  Many people find themselves in a situation where they owe more for the house than it is worth on the current market.  A Short Sale allows them to get out of that situation in a way that satisfies their obligation to the bank to the best of their abilities.

This is also the method that banks prefer over foreclosure.

Brett: John, why would a bank ever agree to sell a home for less than is owed?

John: Well, like other corporation, banks are interested in maximizing profits and minimizing losses.  Banks maximize profits by making loans.  If they have a bad debt on their books, it keeps them from making new loans.  They need to fix the situation while minimizing their loss.  A short sale helps them do that by avoiding the costs of conducting a foreclosure, and the costs of having to maintain, repair and sell the house themselves.

A bank will typically lose about thirty percent more on a foreclosure than a short sale, therefore they usually will take less than what is owed through a short sale in order to avoid the higher cost of a foreclosure.

Brett: How is a short sale different than a typical residential transaction?

John: The short answer to the short sale is that it is basically the same as a typical residential sale.  The main difference is that once a contract has been agreed to by the seller and the buyer, it must be approved by the bank.

For a more detailed explanation of the Short Sale Process, we have a separate video where we walk you through the short sale process.

If you would like more information, take a look at that video or give me a call.

Remember, you are not alone.  There is hope, and there is help.

View the next video in this series: Who is a Candidate for a Short Sale?

 

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