Short sales have become quite commonplace across the United States and very abundant in Santa Clarita.
At the time of this posting there are 987 current active homes for sale in Santa Clarita with 467 of them Short Sales
What is a short sale?
A short sale occurs when a homeowner owes more on their house than the current market value of their home is worth. So an agreement is made between the homeowner and the debtor (bank who holds your mortgage lien) to sell the home “short” of money owed, and release the lien as a settlement of debt.
Common Short Sale myths
A common myth is that the agreement is between the new buyer and the bank. That simply is not true. The agreement is the same as any other transaction and is between the current homeowner and the new buyer. Once the homeowner gets an offer, then he and his listing agent submit a “short sale package” per the lien holders request, to release the lien and move forward with the sale. If the bank likes the price and terms then we have a “short sale approval” at the offered price and the deal is accepted and Escrow is opened.
What does this mean?
Let’s look at an example of a short sale:
- in 2008 Jon bought a home for $500,000
- He currently owes $400,000
- Similar homes in Jon’s neighborhood sell for $300,000 today
- Jon lists his home and gets an offer from a buyer for $300,000
- Jon accepts the offer , and submits the offer of $300,000 to his lender
- The lender approves the terms (Short Sale Approval) and Escrow can open
- The lien is released from the home and Jon is forgiven of the debt
This can affect credit in different ways.
Once you get the answers to your short sale questions, the process becomes much less scary
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