Short Sales

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If you are having difficulty making mortgage payments due to a hardship, don’t worry. There are options available even if the property’s value is less than the mortgage amount owed. In a successful short sale, the bank allows a homeowner to sell the property for less than the outstanding mortgage balance and the lien is released. The homeowner does not pay out of pocket for closing costs like attorney fees or broker commissions as these expenses are included in the short sale.


Matt Melull has years of experience with real estate transactions involving mortgage foreclosures. These situations often begin with an unexpected hardship that impacts a homeowner’s ability to repay their mortgage. Our team understands the financial and emotional stress caused by this difficult period and we are here to help guide you through the options available.

Our team specializes in these difficult situations.  Our law firm partners will advise how to prepare the short sale from start to finish.

Professional marketing.  Your home will receive the same level of attention as all our listings including premium quality photography, print marketing, and internet exposure.

Closing costs and commissions are all included in the short sale.  We only get paid if the deal closes.

Homeowners benefit from a short sale in many ways:

A short sale is less damaging to credit reports than a foreclosure. While the mortgage may appear listed on a credit report as “satisfied for less than the full amount owed”, this is significantly more beneficial to the homeowner than how a foreclosure is reported by the credit agencies.

A foreclosure will prevent most homeowners from obtaining a new mortgage for 7 years. However, homeowners may qualify for a new mortgage only 3 years after a short sale.

Homeowners can continue living in the property until the scheduled closing date, which is typically about 30 days after the short sale is approved by the bank. Homeowners who do nothing through the foreclosure and eviction process will eventually be at the mercy of the sheriff’s lockout notice posted on the front door, which is often only a few days notice.

Some estimate it costs the bank around $50,000 for expenses related to each foreclosure. A short sale helps reduce this added time and financial burden to the bank, which may affect whether or not a deficiency judgement is filed against the homeowner.

The bank can ask the court for a “deficiency judgement” in order to recover money from the homeowner after the foreclosure sale is completed. Ideally the short sale approval terms will include a waiver of deficiency judgement, meaning the bank will not seek to recover money from the homeowner after closing. The short sale allows for dialogue directly with the bank’s loss mitigation department which provides an opportunity to negotiate a more favorable outcome than a deficiency judgement, for example a partial repayment plan or a full waiver of any money owed to the bank after closing.

Some banks will offer homeowners money to help with moving expenses. These funds are sometimes referred to as “financial relocation assistance” or “seller relocation incentive”.


Qualifying buyers and sellers

A short sale transaction is very similar to a traditional sale. However, it is important that both buyers and sellers understand the noteworthy differences. The process can sometimes last 6 months or longer, so it is important that all parties acknowledge the potential timeframe and are prepared to wait if necessary. Setting proper expectations with everyone involved is essential to a successful short sale closing.

Example differences:



Good question. Basically the bank needs time to identify the property’s fair market value, calculate potential losses, and request approval from the mortgage holder investors. Additional time is needed if there are multiple mortgages/liens on the property.

No, the foreclosure process continues. However, the bank will postpone the foreclosure auction date if a short sale is under review.

No, the homeowner does not receive any money at closing. In some cases, the bank’s short sale approval may actually require a “cash contribution” from the homeowner at closing.

Unfortunately short sale approval is not a guarantee. However, our team will help consult and advise on the likelihood based on past experience. Ultimately we are at the mercy of the bank’s decision and homeowner hardship situations vary case-by-base.

This is a legal question best answered by the homeowner’s attorney. Each situation is handled on a case by case basis because there are numerous variables involved. When in doubt, a homeowner should continue to make mortgage payments to the best of their ability, as missing payments will negatively impact credit scores.

Sometimes yes, sometimes no. The bank may issue a deficiency judgement or they may forgive any outstanding mortgage balance. Ultimately we are at the mercy of the bank’s decision and homeowner hardship situations vary case-by-base.

The homeowner pays utilities until the day of closing. Stopping utilities can cause significant damage to the home, like the pipes freezing or the basement flooding. The homeowner should continue to maintain the property to the best of their ability including electricity, heating the home and lawn care.

Buyer pays for a survey. Customarily seller pays for a survey but short sales are an exception.

This cost is included in the short sale loss to the bank at closing. The homeowner does not pay out of pocket.

This cost is included in the short sale loss to the bank at closing. The homeowner does not pay out of pocket.

This cost is included in the short sale loss to the bank at closing. The homeowner does not pay out of pocket.


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