Ask The Expert -- What is a Short Sale?

By: RE/MAX Complete

Q:  What is a Real Estate "Short Sale?"

According to Wikipedia:

"A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan.^[1] It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency."[2]

So let me give you an example on how this works:

The borrow is unable to repay the loan, is facing a foreclosure, and the current value of the home is less than the loan balance.   Borrower may put the home up for sale, find the buyer, and request that the lender accepts the proceeds of the sale as the full repayment of the loan.   The lender will consider whether this will net them more money than a foreclosure and whether they could get the money faster.   If so, they may approve a short sale.  

This process is neither simple nor easy (currently the short sale process is on an average taking 6-12 months), and there are multiple levels of approval the borrower must go through.    The short sale also has a negative impact on a borrower's credit report.

Are you currently behind on your mortgage or are you already facing Foreclosure?  

We would love to go over your options with you!

Contact Us Today

to discuss your options

Fannie Mae Offers Buyer Assistance on HomePath Properties

By: RE/MAX Complete

Fannie Mae Offers Buyer Assistance on HomePath Properties

As part of its effort to stabilize neighborhoods, Fannie Mae has extended a buyer incentive on eligible purchases of Fannie Mae-owned HomePath properties. If all conditions are met, buyers can receive closing-cost assistance of up to 3.5 percent of the final sales price.

To be eligible for the buyer incentive, the initial offer must have been submitted on or after June 14, 2011, and the sale must close by Oct. 31, 2011. Additionally, buyers must live in the home as their primary residence; sales to investors are not eligible for the incentive.

"Supporting homeownership and stabilizing neighborhoods are critical to helping the housing market recover," said Ed Neill, Senior Vice President for Credit Loss Management at Fannie Mae. "Our previous incentives have been effective in securing owner occupants for these properties. By encouraging homebuyers who will make these properties their long-term home, these expanded incentives will help to stabilize communities."

HomePath offers buyers a wide selection of options, including single-family homes, condominiums and town houses. The properties may also be eligible for HomePath Mortgage and HomePath Renovation Mortgage financing, which offers homebuyers an opportunity to purchase with as little as 3 percent down.

In addition to the buyer incentive, a $1,200 bonus is available for selling agents in eligible transactions. This bonus is available if the initial offer is submitted on or after June 14, 2011, and the sale is closed by Oct. 31, 2011.

Freddie Mac has a similar program in place, with both buyer incentives and selling agent bonuses available on sales of its HomeSteps properties. In that program, initial offers must be made between May 16, 2011, and July 31, 2011, with escrow closed by Sept. 30, 2011.

Real Estate101--Short Sale

By Lori Cartwright

Welcome back.  We hope your weekend was great!  We are gearing up for a new week of buying and selling and lots of great home information on our blog.  


As this blog is still quite new, we would like to introduce you to a  feature that will be a permanent part of our blog:  Real Estate 101.  Real Estate, like most professions, has a language that is all its own.  If you aren't familiar with Real Estate vernacular, your buying and selling experiences might leave you feeling like a tourist in a country where no one speaks your language...and that is not a great feeling.  We hope we can alleviate some of this discomfort by guiding you through the new and unfamiliar terms that constitute Real Estate lingo.


So let's start Real Estate 101 today, by learning about the term "Short Sale."  Our friends at The Bittinger Team, explain the term "short sale" like this:

WHAT IS A SHORT SALE? "A "Short Sale" is the sale of a home for less than what is owed to the lender. For example, if your home is currently worth $225,000, and you have a loan in the amount of $260,000 and are unable to make your mortgage payments, then a Short Sale is certainly a consideration when there is proof of hardship and financial distress.  Financial distress causes tremendous strain on families.  It comes in many forms such as: job loss, debt, divorce, serious illness, medical bills or a death in the family.  Many people do not realize that they are really "distressed", but as a result their family home may be in serious jeopardy.  Often times people learn of "Short Sales" after it is too late, as they have attempted to face the hardship and heartache of their situation alone without any form of professional assistance." Many families are finding themselves in this situation as the current real estate market shows home values decreasing...they simply owe more money on their home than what it is worth.  Sometime, a short sale is the only option.  An advantage to a short sale is that sometimes it is possible to negotiate a deal with your lender where they will wave any additional amounts owing on the loan above the sale price.  A disadvantage is that a short sale might affect your credit scores.   Obviously, this is not an ideal real estate situation, but it helps to have a Realtor on your side that has acquired their "Certified Distressed Property Expert" designation or CDPE.  This means your Realtor is familiar with all of the details that will make the sell of your distressed property less...well, distressing.  We have both received our CDPE in order to help our clients through this process. If you have any additional questions about a short sale or if you think you might need us to help you through this situation, please contact us.