Real Estate: What is a Short Sale?

16 Feb

Ray: I’m going to keep this short and sweet.

A Short Sail or Short Pay is a situation where a home owner decides to sell their home for an amount less than what they owe. For example: John pays $100,000 for his home in 2007. In 2010, John decides to sell his home but the current market value is now at $70,000. In order to sell his home, John must conduct a Short Sale.

The catch is, the bank that is owed the money must approve John’s short sale attempt. Depending on the bank, John would typically have to provide a letter of hardship explaining why he can no longer make payments on his home, an income statement, and various other documents depending on the lending institution.

To begin the short sale, a home owner should contact a local Realtor to determine what options are available. A good Realtor will explain the process in full detail in order to help you make the best decision. You should also definitely contact your accountant to determine what tax ramifications a Short Sale may have on your reported income.

If you live in the Los Angeles, San Fernando Valley, or Inland Empire areas, please contact me for assistance with conducting a Short Sale. For all other areas, I can refer you to great Realtor within the Coldwell Banker network.

– Ray Hogan

626-628-5272

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