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Some homeowners are attempting to avoid foreclosure in Santa Clarita by trying to short sale their home. At this time there are 186 active Santa Clarita short sales on the market with a price range of $72,000 to $1,999,000. With the number of short sales in the Santa Clarita real estate market continuing to grow, many buyers and sellersare asking a very important question. What is a short sale?

A short sale is a sale of real estate in which the proceeds from the sale do not cover the balance owed on a loan or loans on a property. Lenders take a payoff on the loan that is less than the original amount owed and they allow the sale to close escrow. The lender will agree to discount the loan due to an economic hardship on the part of the mortgagor, and the homeowner will sell the mortgaged property for less than the outstanding balance of the loan, turn over the proceeds to the lender, most often in full satisfaction of the debt. A short sale is accomplished through negotiation with a bank’s loss mitigation or workout department on the part of the real estate professional, but the lender has the right to approve or disapprove any proposed sale. Main factors contributing to the lender’s decision are the borrower’s financial situation and the current state of the real estate market. After review of the request the lender may in fact determine it makes more financial sense to go forward with a foreclosure, but during these tough economic times the number of short sales are growing.

A short sale, in short is a lender taking a loss to avoid larger costs. It is neither the lender doing the homeowner a favor nor an easy way out for the homeowner, but a process enabled by a real estate professional and homeowner when they are committed to avoiding foreclosure.