SHORT SALES

Short sales usually happen to distressed properties, meaning the prices of the properties are far less than their current market value.

 

When the mortgagors are not able to pay the mortgages, but the mortgagees do not want to refinance or revise the mortgage terms to get a lower interest or to have the property foreclosed by the lenders to decrease their credit scores, the lender will allow a property to be sold for less than the amount owed on a mortgage and takes a loss. Then the lenders will not require the mortgagees to continue to pay the debt.

 

However, there might be some defects in the properties, which cannot be negotiated in the contracts, i.e., the properties would be sold "as is".

 

The benefits of short sales are obtaining properties at much lower prices than the market value. The shortcomings are the long wait for the lenders to approve, which would be from three to six months.