Homes in Gainesville

Homes in Gainesville- Considering a Short Sale?

Looking at Homes in Gainesville-is it a Real Estate Short Sale?


What is a Short Sale?

If you are looking at homes in Gainesville, Florida and see one that is designated a real estate short sale you might inquire “what is a short sale?” A quick definition of a real estate short sale is when a lien holder to the property reduces the amount of the lien to accommodate a real estate transaction.  A short sale of a property is an alternative to allowing a homeowners property to be foreclosed.

How Does a Short Sale Work?

Like the rest of the country, there are a number of homes in Gainesville, Florida that might seem to qualify for a short sale. However, for a borrower to qualify for an approved short sale there has to be a legitimate situation where they have a financial hardship and that foreclosure on the property is inevitable. If a borrower has sufficient assets to pay for his/her mortgage, then a lender will not likely approve a short sale. If a borrower qualifies, then the process begins for the borrower to market and sell the mortgaged property to a prospective buyer. A prospective buyer for a short sale on homes in Gainesville can submit bids to the property owner for the purchase of the property. These bids will usually be less than the fair market value of the encumbered property. If the borrower approves the purchase offer, then the offer is forwarded to the mortgage lender. At this stage, the lender reviews the hardship of the borrower, reviews the borrower’s financial documents and determines acceptance of the amount derived from the sale of the property. Keep in mind that the mortgage lender is not approving the sale of the house. The lender is only acknowledging that the receipt from the property sale to settle the outstanding mortgage on the property. 


What Impact Does A Short Sale Have on a Borrower?

There is no doubt an impact on the borrower. No one can realistically expect to walk away with no ramifications. But the consequences are definitely far less than having a property foreclosed. Some of the more pertinent effects of a short sale on a borrower are:

  • An impact on a credit score of about 80 to 100 points
  • A 2 year wait before a borrower can obtain another mortgage
  • A possible deficiency judgment from the lender although this can usually be negotiated away with a professional negotiator.
  • Tax consequences for an investor property. Primary residences are exempt for debt forgiveness.

Why Would A Bank Accept a Short Sale?

Mortgage lenders are not in the business of holding homes in Gainesville and therefore want to avoid foreclosure if at all possible. The act of foreclosing on a Gainesville Home places a burden on the financial resources of any lender. It can cost up to $30,000 for a lender to foreclose. If the property becomes an REO for the lender then cash reserves are required to be put aside for up to 6 times the value of the REO. This restricts the use of these monies, not allowing for better investments. One of the first jobs of an REO Officer is to liquidate properties acquired by foreclosure. Therefore, it is truly in the best interest of the lender to work out a short sale where permitted as opposed to going thru the foreclosure process.  

What are some negative points in a short sale purchase of homes in

Time for Approval  - Short sales can take longer than a regular sale because they need to get approval by a third-party, which is the bank or mortgage holder.  While the results may be beneficial to the potential buyer, patience is needed in a short sale transaction.

What can go wrong with a buyer purchasing a Short Sale? - Even with short sale approved properties, banks and lenders can still reject offers from buyers.   Some of these causes could be buyer qualification, appraised value showing a large variance between offer price and appraised value, etc.  Having an educated agent help buyers with the short sale process is important to make the transaction move forward toward a purchase.


To find out about listing your home as a Gainesville Short sale visit

Contact Information

Miller Real Estate
Miller Real Estate, Inc.
3601 SW 2nd Avenue, Suite O
Gainesville FL 32607
Office: 352.872.5704
Cell: 352.494.5449
Fax: 352.872.5705