A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.
What is the purpose of a short sale of a home?
Short sales allow a homeowner to dispose of a property that is losing value. Although they do not recoup the costs of their mortgage, a short sale allows a buyer to escape foreclosure, which can be much more damaging to their credit score.
Is a short sale good or bad for buyer?
Discounted Price
Although the short sale property will be priced according to market value, the lender is highly motivated to sell in order to cut the bank's losses. As a result, buyers can often get a better deal on the home than they would if it was purchased through a typical sale.
Can a owner make money on a short sale?
For a short sale to happen, both the lender and the homeowner have to be willing to sell the house at a loss. The homeowner will make no profit, and the lender will actually lose money for selling the house for less than the amount owed.
What are the disadvantages of a short sale?
Disadvantages Of A Short Sale:
- Must meet specific requirements to be eligible.
- More complicated and a lengthier process.
- The sale must be lender approved.
- The bank or lender could pursue a deficiency judgment.
- Your credit score will likely drop.
- You WILL lose your home.
What is the most common commission split in real estate?
50/50
Typical commission splits include 50/50, where the broker and real estate agent receive equal sums of money from a commission split, but they can also use the 60/40 or 70/30 split options. In these situations, the real estate agents get a larger sum of the money than the brokers.
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What is a fair commission split?
How Commission Gets Split with the Broker. The typical commission split between an agent and broker is 60/40 in the agent's favor. Over time, however, the brokerage fee may decrease depending on an agent's productivity and experience. Still, the agent will always pay a brokerage fee, even if it's just 20% of their half
Frequently Asked Questions
What commission do most realtors get?
How much is real estate commission? Typically, real estate commission is 5%–6% of the home's sale price. In most areas, the buyer's agent receives 2.5%–3% in commission and the seller's agent receives 2.5%-3% in commission. This can vary by agent and location.
Does the seller make money on a short sale?
In order for a short sale to take place, both the lender and the homeowner have to be willing to sell the house to the new buyer at a loss. The homeowner will make no profit (and also will pay no fees), and the lender will lose money selling the house for less than the amount owed.
Who benefits from a short sale?
Advantages and Disadvantages of a Short Sale
Short sales allow a homeowner to dispose of a property that is losing value. Although they do not recoup the costs of their mortgage, a short sale allows a buyer to escape foreclosure, which can be much more damaging to their credit score.
FAQ
- What is a typical commission split?
- Typical commission splits include 50/50, where the broker and real estate agent receive equal sums of money from a commission split, but they can also use the 60/40 or 70/30 split options. In these situations, the real estate agents get a larger sum of the money than the brokers.
- What does 60 40 split mean as a commission?
- For example, a fixed 60/40 split would mean the agent receives 60% of their gross commission income whether they generate $1,000 in commissions or $1,000,000 in commissions. A graduated commission split changes based on the production of the agent.
What happens when you do a short sale on your home
| What does 80 20 commission split mean? | For example, if the commission split is 80/20 and the total commission from an agent's sale is $10,000, then $8,000 would go to the agent and $2,000 would go to the brokerage. |
| How do you negotiate a real estate commission split? | How to Ask for a Higher Commission Split
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- Do you still owe money after a short sale?
- In California, lender's approval of a short sale is a release of the remaining amount of the loan. California is one of only a few states that prohibits deficiency judgments on an approved short sale, including junior lienholders who agreed to the sale.
- How do I prepare for a short sale?
- How To Prepare for a Short Sale
- Consider loan modification first. Contact your lender to see if it has programs to help you stay in your home.
- Hire a qualified team.
- Prepare a short-sale package to send to your lender(s) for approval.
- Gather documentation before offers come in.
- How To Prepare for a Short Sale
