BrokerageIndustry News

Short sales expected to rise as housing slows

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

(This is Part 1 of a two-part series. Read Part 2.) Have you ever closed a short sale? If you've been in the business for fewer than 10 years, this may be an entirely new term for you. It's also one of your worst nightmares as both a listing and selling agent. A "short sale" refers to a situation where the seller lacks sufficient equity to close the sale. When this occurs, the seller must contribute additional funds or ask the lender to reduce the loan amount in order to close the sale. As you might imagine, earning a full commission under these circumstances can be extraordinarily difficult. Short sales normally occur in flat or declining markets. It's also common when large numbers of buyers have purchased with no money down. In 2005, approximately 40 percent of all sales closed with nothing down. Virtually all of these loans are adjustable-rate mortgages. If the loan readjusts and the sellers cannot afford the increase in payments, the loan will become delinquent. Most sellers in ...