| Short Sale
Before clear title to real property can be transferred from seller to buyer, all liens and encumbrances including, but not limited to, mortgage(s) or deed(s) of trust, judgments, property taxes, and costs of sale must be paid. While under no legal obligation, the lien holders must agree in advance and in writing to facilitate the short payoff sale.
Short sale is a type of pre-foreclosure sale in which the lender allows the property securing a mortgage or deed of trust loan to be sold for less than the full amount due, and accepts the proceeds from the sale as payment in full. The lender may allow a short payoff sale due to factors such as the borrower’s deteriorated financial circumstances, the property’s physical condition, and local real estate market conditions.
Regardless of what many short sale pros may have you believe, most lenders will approve a short sale only as a last resort to foreclosure for the following reasons:
- Borrower’s insolvency, and
- The proposed purchase price is more than the lender would be able to sell the property after foreclosing on the loan, because
- The value of the property has decreased to an amount that is below the loan balance due to local and national economic conditions, or
- The property was refinanced at a higher value based on an inflated property appraisal report, or
- The property is in such a physical condition that it is not financially feasible for the lender to put it into a marketable condition.
Irrespective of who stands to benefit from a short sale, most lenders have a very stringent hardship test that the financially distressed homeowner must meet in order to seek relief in the form of lender-approved short sale.
What is involved in the process?
A successful short sale involves the following seven steps:
- Prequalification of the homeowner, the property, the real estate market and the lender to determine if it would make financial sense for both the borrower and the lender to agree to a short sale;
- Researching and gathering information, documents and data to be submitted in support of the proposal to the senior and junior lien holders (generally lenders);
- Marketing the property to find a ready, able and willing buyer/investor
- Preparing a compelling proposal indicating the benefits the lender(s) (and other lien holders, if any) stands to gain from the short sale versus allowing the property to go to foreclosure;
- Submitting the proposal to the lender(s) and any appropriate entity and/or individuals;
- Negotiating terms for approval;
- Closing the deal.
Los Angeles Real estate & City Information
| Burbank,CA |
Granada Hills, CA |
Sherman Oaks, CA |
| Cahuenga Pass, CA |
Hidden Hills , CA |
Studio City, CA |
| Calabasas, CA |
Kagel Canyon, CA |
Tarzana , CA |
| Canoga Park, CA |
Los Angeles, CA |
West Hills, CA |
| Chatsworth, CA |
North Hills, CA |
Westlake Village, CA |
| Encino , CA |
Northridge, CA |
Woodland Hills, CA |
| Glendale, CA |
Panorama City, CA |
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