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| I remember the first time I heard the term "short sale." I had no idea what it meant. From the beginning my first assumption was that it was a transaction that took only a fraction of time. Very quickly I learned that my assumption was wrong. The word "short" had nothing to do with time! A short sale is also called a "short pay," which might shed more light on the situation at hand.
| | A short sale is required when the homeowner owes more than the property is worth at the time of sale. Specifically, the seller's debts that are secured by the property AND the closing costs are greater than the property's value. Thus, these are common in a down market. When this happens, the listing agent must request that the lender forgive the indebtedness in order for the transaction to close. This is the stage in the process that can sometimes stall the transaction for up to a couple months. Most lenders will not consider a short sale unless the owner has defaulted on a payment. If the lender realizes that the owner is distressed and can't make payments on the property, a short sale can be the greater of two evils for both the homeowner and the lender. In this case the homeowner gets away with only partially damaged credit and the lender gets some of their money back. If the lender decides to foreclose on the property then it goes on their books and they begin paying property taxes. It makes sense that the lender would often prefer to get as much money as possible and get rid of the property before it goes through foreclosure.
The reality is that the current real estate market in Pasadena is filled with short sales. If you are hunting for the perfect home in today's Pasadena market, you need to understand what a short sale is before writing an offer. If buying a short sale is right for you, there are incredible deals out there! We can provide you with a Hot List of Short Sale Properties for sale in Pasadena.
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