Short Sales...What are they?

One of most recent developments I have seen lately is with "short sales." Mortgage companies have finally gotten wise to the fact that foreclosure doesn't typically result in a good outcome for either the owner or the company. With the recent glut of mortgages in trouble as well as the continued high number of homes for sale in the Bradenton real estate market, we have seen many more "short sales" coming up on the local MLS.

Basically a short sale is a sale in which the bank is not going to receive a full payoff on the loan when it is sold. Since so many home owners are now upside down in their loan payoff to home values, it is a good option for those who qualify. Basically in order to qualify for such a sale a home owner needs the following situation:

1. Home value is lower than mortgage payoff.
2. Home owner is unable to continue paying mortgage due to employment issues or other financial hardships.

The short sale is usually preferred by lenders to a foreclosure. If you can have an owner turn over a property in relatively good condition to a new owner it saves the bank a lot of time and expense. The short sale will come up on credit reports, but at this point it doesn't appear that it will affect your credit as much as an actual foreclosure would.

If you believe that you would qualify for a short sale, I would recommend calling your mortgage company about this potential option as well as speaking with a Realtor about the process. Any sales contracts would need to be approved by the bank, including commission amounts and final sales price.