Offers That Are Fast and Fair

What is a Short Sale?

When a house owner has little or no equity, the only way to sell the house, and avoid a potential foreclosure, is a short sale.

The option involves an investor or buyer working on behalf of the owner to negotiate a sale with the lender. The goal is to put a stop to a potential foreclosure and negotiate a reduced principal payoff on the original loan(s). The house can then be purchased at a reduced price and prevent a foreclosure.


Standard loan payoff:

House Value: $200,000
Existing loan payoff: $210,000
Sales price needed to break even: $225,000

This house would have to be sold for approximately $225,000 to cover all loans, taxes, closing costs, commissions, etc. Unfortunately, the house is only worth $200,000, so the owner would have to come up with $25K to cover the difference, go to foreclosure, or complete a short sale.

Short Sale payoff:

House Value: $200,000
Negotiated loan payoff: $165,000
Sales price needed to break even: $180,000

After the loan is negotiated, the house can be sold for anywhere from $180,000 to $200,000 with no foreclosure and no additional cost to the homeowner.

The advantage to a short sale is that it may be the only way to sell a house where the mortgage is more than the house is worth. It can be a great way to avoid foreclosure.

The disadvantage of a short sale is the impact on the homeowner’s credit. A short sale is better than a bankruptcy and much, much better than a foreclosure (the “Atomic Bomb” of credit scars), but it still impacts future borrowing ability.

Short sales are complex and normally take a long time to complete. They involve a lot of paperwork and require expertise to get through the entire process. They are among the most complex transactions in real estate.

Second Chance Offers and our partners have completed over 500 short sales and we have a very high success rate. If this is your best option, Second Chance Offers can help.

Can I do a short sale by myself?

No, this isn’t possible. A lender will require a purchase offer from a third party before negotiating a short sale. The offer must be valid and be accompanied by a “Proof of Funds” letter from the buyer. The lender also requires a lot of documentation from the homeowner. An investor who’s done many of these, like Second Chance Offers, can help you navigate through all of the short sale hurdles. You really want an expert when doing a short sale.

Will a short sale hurt my credit?

The bottom line is yes, it will. For a lender to consider a short sale, the loan has to be in arrears – behind on payments. These late payments show up on the borrower’s credit. When the short sale is approved, the lender will “charge off” a portion of the loan, which also affects the borrower’s credit. The upside is that foreclosure, the worst thing that can happen to your credit, is avoided and the house is sold.

What does it cost to do a short sale?

Second Chance Offers and our partners have helped over 500 people avoid foreclosure by selling their houses through a short sale. There is no cost to the homeowner for doing this. The bank pays the closings costs, taxes, and fees on behalf of the homeowner. Beware of any company that charge fees for foreclosure avoidance and credit repair – these service come with a “buyer beware” warning.

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