Jennifer Perella

Short Sale Frequently Asked Questions


A short sale can be an excellent solution for homeowners who must sell, but owe more on their home than it is worth. Unfortunately, a number of myths about short sales have developed, and it is important to understand the reality of this process should you find it meets your current needs.


#1 – The Bank Would Rather Foreclose than Consider a Short Sale

This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, Realtors, investors, and even the Federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Banks typically receive more through a short sale than a foreclosure.

Qualifications for a short sale usually include:

  1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  2. Monthly Income Shortfall – “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford, your mortgage.
  3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

#2 – You Must Be Behind on Your Mortgage to Negotiate a Short Sale

While this may have previously been the case, today's lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.

If you meet these three requirements and believe that you may soon be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.

#3 – There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure

This is the belief that probably hurts homeowners the most. Many do not realize that home foreclosure is a process, and that there is time to make a decision that would result in a better outcome.

The foreclosing party — in most cases a bank or lender — can stall a foreclosure up to the final day of the process. Some lenders may stall a foreclosure if they know that you are trying to sell, and many lenders will stall a foreclosure with a legitimate purchase contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.


#4 – Short Sales are Impossible and Never Get Approved


This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.

While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.


#5 – Banks are Waiting on a Bailout and Not Accepting Short Sales


You may have heard this, but the reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay them for losses.

Today, more banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale.”


#6 – Buyers are Not Interested in Short Sale Properties


This is a myth that potential sellers may have heard. Thankfully, this is just not true.

Listing with an experienced agent who is educated in the short sale process and how to market to potential buyers will provide you with the greatest chance of seeing a contract on your property. Contact me today.

Short Sales Questions

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