WHAT IS A SHORT SALE?

Background: Foreclosures and delinquency rates for mortgages are occurring in record numbers for Walton and Okaloosa County. 23% of Florida homeowners are behind in their mortgage payments. Reasons include high unemployment rates, loss of income due to decline in consumer spending, slower housing starts, and mortgage rate increases after conclusion of teaser-rate periods. Also contributing to the difficulties in making mortgage payments is the softening rental market.  Investors who have rental homes from Navarre to Niceville, or resort rental properties, such as condos in Sandestin, Destin and Okaloosa Island have a harder time getting sufficient rents now to cover their mortgage payments or even getting tenants because of an increase in rental properties on the market.  Higher insurance costs are adding to the difficulty for borrowers to keep up with their mortgage payments.  Now that property values have significantly decreased on the Emerald Coast of Florida, these owners are in a predicament. Many have negative equity, i.e. owe the lender more on the mortgage than the property is worth. When this is the case, and the borrower needs to sell, one solution is a "Short Sale".

Definition: A “Short Sale” is when the lender agrees to a accept a payoff for less than the remaining mortgage balance, and possibly forgive the entire shortfall, as well as pay the seller’s closing costs including the Realtor fee. The loss is either completely written off by the lender, a payment arrangement is made with the borrower (promissory note), or a lump-sum for a potentially lesser amount is agreed to (cash contribution).

Why Would A Lender Accept a Short Sale? Banks don't want to own your  real estate.  A foreclosure can cost a lender $30,000 to $60,000.  They have to maintain the property, market the property, pay for utilities, then spend money on closing costs.  They would rather do a Short Sale- where the groundwork has been done for them and generally costs them less than a foreclosure.

Short Sale Package: If you want more information about short sales or want a short sale package to help with your lender, please contact me directly. Remember banks will only approve a short sale in lieu of  foreclosure if you can show a hardship.  IE: Loss of job, medical expenses, transfer of job, divorce, death in the family, a true hardship.