LOS ANGELES SHORT SALE PROPERTY
A Los Angeles short sale
is a property being sold by an owner that is heading to foreclosure. The owners realize they can no longer afford the monthly payment and try to sell the house before the the lender completes the foreclosure process on the property. Preforeclosure properties such as these are also know as distressed properties and NOD's, meaning they have received a notice of default.
The term "short" means that the amount the owner has listed the house for is less
than the amount owed on the loan; the listing price being a reflection of current comparable properties in the area. As an example, let's say someone purchased a home two years ago with 100% financing for $680,000 in the middle of the hot real estate market. The home was purchased with an ARM; the ARM matures after two years and their payment jumps $1,500 a month. In the meantime, the real estate market cools down, driving down prices of homes in the area.
The owner is no longer able to make the house payment and decides to put the home up for sale. After getting an appraisal on the home, the appraiser values the home at $599,000.
The owner is now upside down, owing more on the home than it's worth. He can't sell it for more than the current value of $599,000 so he's hoping the lender will cooperate with him and accept less than the full amount owed. In the short sale process,
the lender has the authority to approve, deny or counter the submitted offer.
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