House values and home worth resources.Web's #1 source for home owners.

Get Free Home Loan Quotes Now!

Fill in the form and in just a few simple steps get quotes from up to four mortgage lenders who are competing for your business.

1. Type of loan

Mortgage Refinance
Debt Consolidation
Home Equity Loan or Line
New Home Loan

2. State


3. Property type


4. What is your credit rating?

Find Your Home Value


Home Purchase Tips & Advice

VA Home Loans Are Making a Comeback
Buying a home has become harder to do as lending guidelines have become stricter. If you are a veteran, you may find you have the best chance of all in becoming a home owner.

Can a VA loan help you buy your new home?
Buying a home has become harder to do as lending guidelines have become stricter. If you are a veteran, you may find you have the best chance of all in becoming a home owner.

How to Save Money and Close Your Home Loan on Time
Underwriting guidelines have tightened and lenders are taking longer to approve home loans. What can you do to close your escrow on time?

Home Buying Success: What You Need to Know About Short-Sales

By Sheryl Landrum
Home Worth Columnist

Send to a Friend Send to a Friend | Printable Version Printable Version

The real estate buzzword today for home buying and home selling is "short sale." Selling a home with a short sale means the lender has agreed to allow a sale for less than the balance of the mortgage(s) against the property. Does this mean that home buyers are getting a good deal? Here's what you need to know about short sales.

Home Buying Basics: Learn How Lenders Treat a Short Sale
Lenders who have agreed to a short sale are making a determination that it is less costly for them to sell the home at a loss than it is to initiate foreclosure procedures. However, this does not mean that lenders will bend over backwards to help home buyers complete the purchase. Buying a house through a short sale can take patience and may not be the home buyer's best bet. Why?

  • Home Value--just because the house is selling for less than is owed on it does not automatically make it a good deal. The home sellers may have initially paid too much for the house and may have borrowed too much against it. The lender will require a CMA (comparative market analysis) or appraisal to determine the value of the home; if the lender thinks it can make more money by foreclosing it may do so or wait for a higher selling price.
  • Home As Is--the hard fact is that short sales are generally not in prime condition and the lender on a short sale is not going to invest more money in a house it is already losing money on. Also, homeowners losing their home in a short-sale have no real motivation to have the house sell. They leave the home with no monetary value and emotionally they have probably already moved on.
  • Closing Costs--Many lenders will not absorb the cost of items that home sellers generally pay for. Roof and home inspections, pest control, and home warranty plans are generally paid for by a home seller, but most lenders just won't go there.
  • Closing Escrow--the length of time to close escrow is generally much longer on a short sale as a legal process is involved. Also, if there is more than one lender, for example if the seller has a first and second mortgage, both lenders will have to agree to the short sale.
  • More Work and Less Income--your real estate professional generally suffers with a short sale as well. Lenders often ask a real estate agent to discount his or her commission while generating two or three times the paperwork to close the deal. Finding a real estate agent with experience in short sales is recommended.

It is obvious that short-sales come with baggage that home buyers need to be aware of. However there is money out there to be made on the right deal--and now that you know some of the pitfalls with a short sale, you can search out a transaction that will work well for you.


About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage of San Diego at the Prudential Realty Office in Bonsall, California.
Marketplace Contact us