Short Sale Negotiation


A short sale is selling a property for less than the outstanding balance owed to the bank.

Basically, a short sale is nothing more than negotiating with a lien holder the payoff of a loan for less than what is owed, which is short of the full debt amount.  

A short sale does not automatically extinguish the remaining balance owed or what is known as the deficiency, unless settlement is clearly indicated on the acceptance of offer.  However, in many cases deficiency waivers can be negotiated as part of the short sale process.

One of the main reasons people take the short sale route is to avoid foreclosure. 

By nearly any measure, a foreclosure is the most damaging event your credit status can encounter – even worse than bankruptcy. A short sale can be the least damaging way to avoid foreclosure. And you should know that the debt owed by a seller resulting from a foreclosure may be substantially higher than any debt owed to the bank resulting from a short sale. Typically, a short sale will leave the property owner in a better position with the bank than if the property were sold at a foreclosure sale.  This is why simply “letting the house go” could result in bigger problems down the road.

But avoiding a foreclosure is not the only reason people decide to attempt a short sale. Loss of job or income can make what was once an affordable payment too burdensome for financial survival. Death, divorce or illnesses are other reasons people find the need to short sell their homes. Whatever reason you may have to consider a short sale, we will be glad to talk to you about your options – at no cost – so you can make the choice that is best for you.

As mentioned above, in a short sale the lender is accepting a balance lower than the actual loan amount. Therefore, the short sale will only go through if the lender accepts the terms of the short sale (which is at a loss to them) and there is a buyer that is ready to complete the sale.

On the bank’s side of things, they are looking to avoid bigger losses.  So, almost every short sale approval given by a bank is based on their estimation of what will cost them the least.  That’s not to say they don’t consider your hardship, but the bank’s decision is made with an eye on their bottom line.  With that in mind, working with a firm that is familiar with the process is vital. And remember, your real estate agent has the job of selling your home, not negotiating the terms of the sale with your bank. Let us help you on the legal side of things.

Don Gervase