Smooth Real Estate Transactions 

What is a Short Sale?

A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.

In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure. A bank will typically determine the amount of equity (or lack of), by determining the probable selling price from a Broker Price Opinion BPO (also known as a Broker Opinion of Value (BOV)) or through a valuation of an appraisal. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset, businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults.

It is important for you to consult with a tax professional and an
attorney to insure your legal rights and explain any tax consequences that could result from a short sale.
 


Detailed Service Area

Vista Short Sale,  Escondido Short Sale, Poway Short Sale, Encinitas Short Sale, Carlsbad Short Sale, Oceanside Short Sale,La Mesa Short Sale, El Cajon Short Sale, Alpine Short Sales, Lemon Grove Short Sale, Spring Valley Short Sale, Mt. Helix Short Sale, Mission Valley Short Sale, Allied Gardens Short Sale, Santee Short Sale, Lakeside Short Sale, Campo Short Sale, Imperial Beach Short Sale, San Ysidro Short Sale, Nestor Short Sale. Coronado Short Sale, Ocean Beach Short Sale, Downtown San Diego Short Sale, Point Loma Short Sale, La Jolla Short Sale, Pacific Beach Short Sale. Bay Park Short Sale, Mission Beach Short Sale, Golden Hill Short Sale, South Park Short Sale, North Park Short Sale, Mira Mesa Short Sale, Linda Vista Short Sale, Mission Valley Short Sale, Hill Crest Short Sale, Jamul Short Sale, Eastlake Short Sale, Chula Vista Short Sale, National City Short Sale, Rancho San Diego Short Sale and other Communities in San Diego County, HAMP Program, HAFA Program


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