What is a short sale in real estate?
Very simply, 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. The homeowner 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 this is in full satisfaction of the debt. The lender has the right to approve or disapprove of a proposed sale.
A short sale is generally executed to prevent foreclosure. The decision to proceed with a short sale is determined by 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 it will result in a smaller financial loss than foreclosing on the property because there are substantial carrying costs associated with foreclosure.
In the current Westport real estate market, we are seeing many short sales. The buyers would still present their offer to their real estate agent, and the buyers agent presents the offer to the seller’s agent. The seller’s agnet then presents the offer to the bank, because it is the bank, not the homeowner, that makes the decision on whether to accept the offer or not.
For the homeowner, a short sale can avoid a foreclosure on their credit history.
In this tough economic climate, all throughout Fairfield County, real estate agents are now being confronted with many situations that have not been so common in the past, including short sales.
I personally believe that a buyer can take advantage of a short sale and get a good deal because I believe that banks, in general, don’t want to own homes and would rather negotiate and accept less and avoid foreclosure.
Look out for short sale opportunities in Westport, CT.
