The Short Sale Process in Philadelphia


For homeowners who’ve fallen behind on their mortgage payments, a short sale of their home (when a house is sold for less than the outstanding mortgage) may help them avoid foreclosure. It can be a daunting process, but navigable with some expert advice.


For those homeowners who have fallen behind on their mortgage payments, short sales help avoid foreclosure. Short sales occur when homes are sold for less than the outstanding mortgage debt owed. The seller is unable to make up the difference, and the bank agrees to forgive the amount owed. Banks often request financial proof of the seller’s hardship, and the extra paperwork associated with a short sale often prolongs the buying process. Yet these types of distressed property sales can result in price bargains or at least below-market sales prices for motivated and flexible buyers.

Differences Between a Short Sale and a Foreclosure

When a house goes into foreclosure, the bank assumes ownership and control of the sales process. Short sales are often viewed as the final step before foreclosure, allowing owners in default to remain in their home and retain ownership rights until a sale is finalized. When the owners stay in the home, the property may be in better condition than vacant foreclosures, but often the owners have not been able to keep up with required maintenance. Like foreclosures, short sales are typically sold “as-is.”

Seller’s Motivations

If the bank approves a customer’s short sale request, they are in effect agreeing to forgive the difference between the mortgage loan and the net settlement proceeds. Sellers will come away from the deal without a record of foreclosure, but often they suffer tax consequences, and their credit will be downgraded. Homeowners considering short sales are advised to see both legal and tax advice before placing their homes on the market.

Buyer’s Motivations

Buyers interested in distressed properties often request below-market pricing in return for assuming greater risk and undergoing a longer, more complex home purchase. In fact, real estate agents may ask buyers to sign a notification like the one recommended by the Pennsylvania Association of Realtors acknowledging that their understanding of a short sale and the extended time period and extra costs involved in this process. In addition, properties in short sales are often poorly maintained, and the owners cannot afford to make any repairs.

Seek Professionals with Distressed Property Expertise

Real estate agents who specialize in distressed properties understand the amount of work required to complete a deal. Many are familiar with the packet of information requested by banks and can advise sellers on preparing any disclosures required in short sale listings. When searching for a Philadelphia title agency to close your purchase, ask title agents if they have expertise in closing short sales. Distressed properties may also have liens placed on the property, which must be identified and cleared through the title process.

Short sales are one of the most difficult types of residential real estate transactions to complete successfully. If you’re considering buying or selling a home via short sale, take the time to understand the inherent risks of the transaction and seek out knowledgeable real estate professionals for assistance as you work through the complexities of the process.


Jennifer DiGiovanni is a freelance writer and a partner in a real estate investment firm focusing on residential properties. She previously worked in the financial services industry and has earned an MBA from Villanova University. Jennifer enjoys writing about real estate, home improvement and small business.

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1 Comment

  1. The Short Sale Process in Philadelphia | My Website
    July 9, 2014

    […] The Short Sale Process in Philadelphia […]


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