Oahu Home Sales

I am often asked in today’s Oahu marketplace, what is a short sale?

The short answer is…….

Short Sale: Sale of property valued for less than the amount due on the loan.

The long answer is…….

Short sales can be a win/win in a losing situation. Borrowers may be relieved from their debt and Lenders may save the time and costs of a foreclosure. In a short sale, the borrower (Seller) negotiates with the Lender to allow a sale of the property either to a third-party or back to the Lender in lieu of foreclosure, and the Lender will in turn require either a gross, net or minimum payoff.

Examples:

Gross Payoff - Lender is paid the amount the property is sold for and Sellers are responsible for all closing costs.

Net Payoff - Lender is paid the net proceeds after all closing costs are paid.

Minimum Payoff - Lender requires a specified minimum amount of proceeds, and the Seller may be entitled to the surplus proceeds and is usually responsible for all or
a portion of the closing costs, and the Seller may have to bring in money to satisfy the Lender’s minimum payoff requirement.

Transaction Issues
To numerous to mention all of them, but here are a few……Time limitations; property values changing; Buyer needs quick loan approval; Seller should consult tax advisor for tax ramifications of short sale; Seller may be unable to come up with additional closing monies, if needed; and Escrow can’t proceed without payoff and release instructions from seller’s lender.

Bottom line, these types of transactions are complicated and require excellent Realtors, Lenders, and Escrow firms. Thanks to Title Guaranty Hawaii for contributing content for the blog entry.

This entry was posted on Wednesday, September 10th, 2008 at 12:23 am and is filed under For Buyers, For Sellers, Market Watch, Oahu Information, Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.