The following bullet points outline the advantages of a short sale, and why they succeed or fail.

Advantages for the Seller to Short Sale

• May stop and/or postpone the foreclosure process
• Avoid having a foreclosure on your credit report
• Avoid an otherwise embarrassing and stressful situation
• Might live mortgage free during the short sale process
• Lender typically pays all the closing cost and broker commissions
• Debt relief from the lender on the short payoff, in most cases
• May avoid the tax consequences and a deficiency judgment
• Being responsible and doing the right thing

Advantages for the Lender to Short Sale

• Get bad debt off your financial statements
• Avoid foreclosure expenses and prolonged cost
• Avoid further loss due to declining property values
• Avoid eviction cost and all related expenses
• Avoid rehab expense when getting the home ready to sell
• Avoid vandalism and theft expenses typical to vacant homes
• Shorten the timeframes necessary to sell and close a home

Advantages for the Community to Short Sale

• Property values are better protected in a short sale compared to foreclosure
• Neighborhoods avoid excessive crime when properties remain occupied
• Neighboring homeowners don’t have to deal with a vacant foreclosure
• Statistics show that short sales sell at a higher average price versus a foreclosure

Advantages for the Buyer to Short Sale

• Buyers may end up with a property at a discount price
• Deferred maintenance is less likely in a short sale
• Chances of vandalism and theft are dramatically reduced
• Buyer has less due diligence cost prior to the closing (de-winterization, re-winterization, etc.)
• Buyer has less cost after closing on a short sale versus foreclosure (re-key, repairs, etc.)

When Is a Short Sale More Likely to Succeed?

• The seller provides all the lender required documentation and hardship information
• Seller has experienced a legitimate and proven hardship
• The property is in a marketable area and in marketable condition
• First lien holder receives 50% to 70% of what is owed and second lien holder getting 1% to 5%
• Package Deals—if there are multiple loans and the lender is the same
• Ample time to market the property, negotiate with the lender, and close before foreclosure occurs

When Is a Short Sale Unlikely to Succeed?

• Seller does not provide a complete short sale package
• The seller has not experienced any type of proven hardship that has led to the delinquency of the loan
• Seller is “underwater” and current on the loan with no plans of missing a payment
• If the seller is in a bankruptcy plan
• The seller has taken out a recent loan against the property
• If the seller has completed a recent refinance with cash out
• Outstanding judgments and liens cloud the title
• Foreclosure sale is scheduled in less than seven days and there isn’t enough time to complete a short sale