What is a Short Sale? What is a Sale?

Both a short Sale and a Sale result in the transfer of ownership from the seller to the buyer. To understand the concept of these types of sales, I will provide an example for each. Let us assume that the sales price is $500,000 and the mortgage is $300,000. The seller secures $200,000 and the mortgage company receives $300,000. The mortgage company is typically known as the bank. That analysis was easy.

Let us take example 2. Same as example 1 above, but now let us assume that the mortgage is $600,000. Now how do you sell a house for $500,000, when the mortgage is $600,000. Usually you don’t. You are short $100,000 of equity. In order to complete this transaction, the mortgage company must be short the money it needs. But they may do this an accept $500,000. They are short $100,000. Thus the name of the sale, Short Sale. The seller will receive zero and the bank will receive $500,000. The seller walks away with nothing. The bank walks away with $500,000. And the bank has a $100,000 loss.

The bank must give permission for this transaction to proceed. The approval is done by an experienced attorney negotiating with the bank. Blutter&Blutter handles this type of transaction, a short sale. Call Blutter&Blutter at 516 433 7777 or 718 529 7777 or 1 800 864 9943.