The Definition of Real-Estate Short Sale in Arizona

Sellers face legal ramifications if they strip the property prior to vacating.

The definition of a real-estate short sale is fairly standard throughout the United States. Yet, state laws vary, and the ramifications of a short sale for the seller can vary from state to state. The Arizona Department of Real Estate's commissioner has cooperated in preparing the "Short Sale Seller Advisory", to help sellers navigate the rough waters of a short sale transaction.

Short Sale

A short sale occurs when the sale price on a piece of real estate is insufficient to pay off the debts on the property. The primary reason for a short sale is a drop in property values. When the property owner is upside down in the real estate loan, owing more than the current market value of the property, a short sale is one way to liquidate. Sellers view short sales as an alternative to foreclosure. The federal government encourages lenders to consider short sales, as they are less detrimental to neighborhoods, compared to foreclosure. For the lender, the short sale is often less expensive than a foreclosure.

Short Sale Seller Advisory

Before considering a short sale in Arizona, the seller should read the "Short Sale Seller Advisory", which is available as a downloadable PDF file on the Arizona Association of Realtor's website. The advisory lists warnings, alternatives and procedures for a short sale in Arizona. It urges the seller to consult the advice of an attorney, explains how to avoid predatory scams, and recommends seeking the assistance of an experience real estate licensee.

Lender Permission

Before listing a short sale, the seller contacts her lender to obtain permission. Before granting permission to consider a short sale, the lender typically requires the seller determine the current market value of the property. A lender may consider agreeing when property values have dropped below the outstanding balance of the loan, and the seller can no longer make payments. Once a seller accepts a buyer's offer, it goes to the lender who accepts, rejects or counters the offer.

Deficiency Judgements

When agreeing to a short sale in Arizona, the lender might just be agreeing to release the lien on the property, yet still hold the seller financially responsible for the deference between the final sale price and the loan balance. The "Short Sale Seller Advisory" urges sellers in Arizona to consult with an attorney when negotiating with a lender on a short sale. Should the lender agree to forgive the unpaid balance of the debt, get the commitment in writing.

References

• Arizona Association of Realtors: Short Sale Seller Advisory
• Chase Homeownership Center: Short Sales FAQ
• National Oceanic and Atmospheric Administration: Short Sale Information