What Is A Short Sale In Real Estate?

by Bob Bittelari 08/04/2019

You might have heard one or two things about a short sale in real estate. It may look like a hard concept, but it is just another term for a conditioned sale. 

What is a short sale?

A short sale in real estate happens when a property owner needs to sell the property for less than the amount owed on the mortgages or liens. It occurs when the current fair market selling price is lower than the sum of the mortgages owed, but the seller must sell anyway.

It is a term coined to mean that the current seller is short of cash to repay the original mortgage that is currently outstanding and cannot receive an offer of a high enough price to cover it. Since the seller is short of money, he has to ask for help from the bank to recoup a portion of the loan. 

Today, short sales rarely happen. They were prevalent during the Great Recession but not anymore. In the rare cases where one is necessary, the bank may take into account mitigating circumstances such as a death of the primary income-earner, or a homeowner subject to a health challenge.

Advantages of making a short sale in real estate 

As gloomy as it sounds, short selling is not at all that bad. The following are some of the advantages that come with short selling: A short sale protects your credit score. Instead of the alternatives, foreclosure, and default, a short sale protects your credit score as it shows that you make financially sound decisions. Credit bureaus often frown upon a foreclosure, so it is better to make a short sale.

A short sale helps you avoid foreclosure. One of the worst things that one can do to a credit score is to add a foreclosure record on it. Hence, it is better to make a short sale as it deflects the adverse effects of having a mortgage foreclosed.

A short sale saves the seller from paying the fees that usually get paid by the seller. The charges get covered by the bank.

Disadvantages of making a short sale in real estate 

There is one disadvantage to making a short sale in real estate, and that is the lack of cash received on the part of the seller. This one is a given since the quick sale is a Hail-Mary pass in an otherwise potential foreclosure on the property.

Final Tip

Sometimes you need to short sell your property because you need to move to another state or country and keeping another property is not practical. Hire a real estate agent, one specializing in short sales, today to help you with the transaction.

About the Author
Author

Bob Bittelari

 Bob is known for giving clients his undivided attention. He takes the time to listen, educate, advise and meet individual needs for both sellers and buyers. He understands how busy we all are and makes every effort to maximize your time. Bob had been with the Century 21 system for over 30 years and is a member of the Century 21 Master’s Hall of fame, a Centurion producer since 1992 and award winner of the coveted President’s Award. . Bob has served as President of his local Real Estate council of the Greater Boston Real Estate Board, coached both Arlington Little League, Arlington Youth Hockey, is a member of the Touchdown Club of Arlington, and enjoys golf, cross fit, and obstacle racing.

Having just joined Berkshire Hathaway HomeServices Commonwealth Real Estate, a name revered worldwide and has stood for strength, integrity, and trust, Bob will use his knowledge and skills in your best interest. You will be impressed with his level of service and professionalism. He is never too busy to service all of your real estate needs, so contact Bob today at 781-454-9900.