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The difference between a traditional sale and a short sale

FALLBROOK – Ever encountered the terms “traditional sale” and “short sale” but are confused as to what they mean and how these things differ from each other? Whether you’re on the buying or selling side of real estate, these concepts are helpful for you to understand.

A traditional sale is pretty straightforward. It’s when a homeowner sells their property for an amount that covers the outstanding mortgage and any other fees or expenses. Everything goes smoothly, the buyer gets the house, and the seller walks away with some cash in their pocket.

Now, a short sale is a bit trickier. It happens when a homeowner owes more on their mortgage than the current market value of the property. So, instead of making a profit from the sale, the seller is asking the bank to accept less money than what they owe. It can take a bit longer and involves a lot of negotiations with the bank, but it can be a way for homeowners to avoid foreclosure and get out from under a hefty mortgage.

Let’s illustrate the difference with a couple of scenarios. Meet Pam (seller) and Mark (buyer).

Scenario #1: Traditional sale

Pam owns a lovely home in San Diego but finds herself in a tough spot financially. She’s fallen behind on her mortgage payments, and her house is now worth less than what she owes to the bank. She’s considering selling the house.

Mark is on the lookout for a new home in the same neighborhood. He comes across Pam’s house and falls in love with it. They agree on a price, and Mark makes an offer through his real estate agent.

Pam accepts Mark’s offer, and they proceed with the sale. The transaction goes smoothly, the bank receives the full amount owed, and Pam walks away with some money in her pocket.

Scenario #2: Short sale

Pam has fallen behind her mortgage payments and has decided to sell her home. Her house is now worth less than what she owes to the bank. Mark is interested in buying her home.

Pam’s bank needs to approve the sale because the offered price is less than what she owes on the mortgage. It takes some time for the bank to review and approve the offer, and there’s a chance they may negotiate for a higher price or impose certain conditions. Eventually, if the bank agrees, the sale can proceed, but it’s a more complex process compared to a traditional sale.

In both cases, Mark gets his dream home, but the process and outcomes for Pam are quite different depending on whether it’s a traditional sale or a short sale.

If you need help with buying or selling a home the traditional or short sale way, you’re in luck – our agents are expert negotiators for both, with the help from out folks at Short Sale Expeditor. Give our office a call so we can help.

This article first appeared on Broadpoint Properties' website,

Submitted by Elisabeth Hartig Lentulo, broker associate, who can be reached at 760-532-1057, [email protected] or CalBRE #01904564


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