Real Estate Short Sale

What is a Short Sale in Real Estate?

What is a Short Sale?

Short Sale Definition and Example


A Short Sale is when the amount realized from the sale of a property is less (short) than the amount owed including outstanding liens, such as property taxes and homeowner association dues and closing costs.


You sell your home for a sales price of $800,000.00, less than what is owed on the 1st mortgage ($825,000), and 2nd mortgage ($25,000), outstanding real estate taxes ($10,000), HOA dues and penalties ($1,500) and the closing costs associated with the sale ($48,000). These closing costs typically include escrow settlement, title insurance, demand processing, and natural hazard report.

The property is short $109,500 based on the sales price less the mortgages, taxes, HOA and closing costs.

Sale Price $800,000
1st Mortgage $825,000
2nd Mortgage $25,000
Property Tax Owed $10,000
HOA Dues & Penalty $1,500
Closing Costs $48,000
Amount Property Sale is Short $109,500

The short sale process is similar to a regular home sale in that you are selling your home to a buyer who is purchasing your home with much of the typical sale processes being followed.

The main difference is that the lender(s) or lien holder(s) must approve the sale as it is for less than the amount owed. An experienced realtor can negotiate with the lender(s) or lien holder(s) on how much they are willing to accept, allowing the house to be sold, reducing losses and saving credit. If you have multiple mortgages, then more than one settlement may need to be negotiated.

Our professional team is highly experience in working with short sales. We will short sale package, collateral package and mitigation package, for the lender(s) and or lien holder(s). We know who to contact and have the ability to negotiate directly with the banks. This is key to a successful short sale.

Contact Area Realty Group with any Real Estate Questions