What Is A Short Sale?

Pensacola HouseReal Estate jargon can be difficult to understand if the terminology is not explained properly. One term that seems to stump quite a few people is “short sale.”  There are so many unknowns about short sales that it causes many people to run in the opposite direction when they hear the term used. All that pops in a person’s head is: What is a short sale? Is it worth going through the process of a short sale? Do I qualify to sell my home as a short sale?  By the end of this blog, you will have all the answers to the above questions.

A short sale is when the owner of a home realizes they cannot make the payments on their home and that they owe more than the property is worth. The home owner of the house can go to their lender and ask permission to sell the home for less than what they owe the lending company. A short sale is also commonly known as the last preventive step before a home goes into foreclosure.  For instance, if a home owner owes the mortgage lender $125,000 and the home is only worth $115,000, the owner can go to the mortgage lender and ask permission to sell the home as a short sale. Once the lender approves the short sale, the property can be sold for a price lesser than the amount owed.

There are a few benefits when having a short sale vs. a foreclosure. Whether a home is listed as a short sale or foreclose, the owner’s credit score will take a big hit; however, if an owner has a home foreclosed upon him/her, the credit of the owner will take a more drastic hit than if the home was sold as a short sale. On average, a short sale will lower the home owner’s credit by 100 points, while a foreclosure will lower it about 250 points. Another benefit of a short sale is that most lenders will not make the owner of the home come up with the difference in the price he/she owes. If we continue to use the figures from above, the difference that will be abolished is $10,000. Be mindful that this is not true in all cases, some lenders will still expect the difference, or part of the difference to be paid.

A homeowner qualifies for a short sale if he/she  cannot make the payments on their home due to loss of job, financial hardships (for example, an unexpected serious illness that causes numerous expenses),  or if their home has gone upside down. A home is considered upside down if the amount owed to the lender is greater than the appraised value of a home. When a home owner is experiencing any of the above items or all of the above items, he/she can go to their lender and ask to have their home become a short sale. Before making the choice of whether or not to sell a home as a short sale or have it go into foreclosure, the owner of the home needs to take his/her personal situation into consideration before making any decisions. Home owners also need to remember that short sales can be a very lengthy process. A lender has 30-60 days to make the choice on whether or not to agree to a short sale and once the home finds a buyer, it can take anywhere from 60-120 days to close.

Source:  Blake Lewis

Greater Pensacola, FL Real Estate Experts – Making It Happen for Buyers and Sellers!

Grand Realty is a greater Pensacola real estate company that opened its doors in June of 2003. We strive to help all of our clients with their individual real estate needs, whether it’s buying a home in Pensacola FL and the surrounding area or selling their existing Pensacola property.

We have approximately 30 agents with a wide range of specialties that include:

  • Pensacola new home buyers
  • Pensacola short sales
  • Pensacola Foreclosures
  • Pensacola Investment properties
  • Pensacola commercial properties
  • Pensacola vacant land
  • Pensacola water front properties

Grand Realty is also proud to say we have agents who are bilingual, Spanish and Chinese that are placed throughout a good majority of Northwest Florida including Pensacola, Milton, Pace, Navarre, Perdido Key, Jay, Cantonment, Gulf Breeze, and Navarre. The Broker of Grand Realty is also licensed in Alabama. Please feel free to email or give us a call, and from everyone at Grand Realty, thanks for your business!

Grand Realty 3806 Hwy 90, Pace, FL 32571 Office Phone: 850-512-1185 Office Fax: 850-512-1195 Email: Office@GrandRealty.net

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