A Short Sale is when a lender agrees to discount their payoff amount to accommodate a sale for the following:

1.      The borrower / seller has experienced some type of hardship.

2.      The value of the property is proven to be less than the amount needed to pay off all loans, encumbrances and real estate selling costs.

3.      The loan is delinquent or in default.

1.      The seller can avoid having a "foreclosure" on their credit report. Recent reports state that if a borrower misses 2-5 mortgage payments, their credit score will be affected by an estimated 20 to 60 points.  

2.      If a borrower suffers a foreclosure, it can affect their score 140 to 200 points.

3.      Assuming the seller is already not making mortgage payments, they can continue to live in the property without making payments during the short sale process.

4.   Most sellers feel it is the "right thing to do" when in default.  It is a respectable option.  

1.      Not having a “bad debt” on the books.  Investors may require their lenders not to exceed 3% of bad debts on the books.

2.      Not having to complete the expensive foreclosure process, including all of the legal fees and procedural duties.

3.      Not having to evict occupants or pay for their cooperation.

4.      Not having to rehabilitate the property.

5.      Not having to later sell the property for the same amount as the proposed short sale would generate, or possibly less.

6.      Not having to pay a commission to a broker if they choose to market and list the property for the lender.