Short Sale Condos

Short sale condos are all over the market place but I’m constantly hearing the question, “what is a short sale condo?”  A short sale is where a bank agrees to take less than the mortgage amount of the loan.  For an example, lets say you purchased a condominium in Los Angeles for $350,000.  The bank financed $325,000 for you back in 2007.  Now you are late on your financing payments and you want to sell. If after many months of selling the condo you finally get an offer but the offer is less than the mortgage amount of $325,000.  In fact, it’s quite a bit below.  It’s at $ 225,000.  The bank, depending on the situation may actually accept this contract.  Why would they do that?

The short sale condo is popular right now because of the amount of foreclosed condos.  There are so many foreclosed condos that the banks are now taking less than the mortgage so they do not have to go into foreclosure with the condominium. Let’s go back to our example. The bank now accepts the $100,000 discount.  They are clean of the loan and they can move on.  If they foreclose on the condo, they are in a position that it may take another six months before they actually can take possession of the condominium.  That’s another six months of not being paid.  Then they have to market the condo.  This may take a few months to get started because the process before marketing the condo is getting it ready to market.  They’ll have to come in with a team of construction guys and clean everything up to make it ready to market.  How much will this cost?  The bank factors this in as well.  Now that the bank has spent $20,000 in fixing up the condo to get it ready to market, the process begins for selling the condominium.

Now the bank has to hire a Realtor to sell this foreclosed condo.  How much will that be?  Five to six percent of the purchase price is typical to pay to a real estate brokerage.  When you start adding it all up, the time, the money and the energy, many times selling the condo through a short sale is just easier.

Short sale condominiums are rampant all over the United States.  Choose a Realtor and start looking.  You’l find that a high percentage of the market is selling short right now.