Flrjc Business Blog

A real estate short sale occurs when a property owner sells their property for less than the mortgage amount owed to their lender(s). On the surface, this may seem like only the borrower benefits from such a transaction. However, that couldn’t be further from the truth. Note:  See our “Are You a Short Sale Candidate” to find out if you or someone you know are short sale candidates.   For discussion purposes we are going to assume a homeowner is a short sale candidate.   For the homeowner, a short sale makes it possible to sell their home for less than the total amount owed. The sale of the property releases the homeowner from their debts and obligations without having to file bankruptcy or endure foreclosure. The homeowner is able to save their credit, regain their dignity and their peace of mind. Lastly, the homeowner will be closer to rediscovering the American dream of homeownership because they are able to amicably resolve their lender(s)’ concerns.   For the lender(s), a short sale can be less costly than foreclosure and can provide an acceptable hedge against future price declines within the market. Also, for lenders that have become insolvent and need to liquidate assets, a short sale is a way to quickly raise capital when compared to the foreclosure option – a process that could take a year or more to accomplish. Lastly, for lender(s), a short sale means a guaranteed loss now as opposed to an uncertain loss in the future. This may be in many instantances a much larger loss.