Buying a Los Angeles Home. What is a Short Pay?

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Real Estate Agent with Power Brokers Int'l BRE# 01439865

I often get a request from people buying a Los Angeles home as to what the disclosure “Short Pay” means.  This is a brief overview of the process.

Short Pay is actually the same as Short Sale.  A short sale means that the homeowner is upside down on their Los Angeles Home Buyers.  What is a Short Pay?mortgage,

What does this mean for a Los Angeles home buyer?

The homeowner owes more on the mortgage than the home is actually worth.  Instead of sitting in the home without making the monthly mortgage payments, or strategically defaulting (able to afford the payments but choosing not to continue), the homeowner tries to sell the property at market price.

Understand that because the homeowner owes more than the home is worth, the lender is going to expect the home to sell at market price.  There is little or no negotiation on a short sale.

Escrow is not opened until after lender approval, and generally no deposit is paid until that time.  So there is no risk to the buyer.  However, depending on the expertise of the listing agent and how many lien holders there are, the length of the short sale process can vary and can take up to several months.  It is also possible that the sale will not go through.

So if you are a Los Angeles home buyer considering a short pay you need to be in it for the long haul.

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Topic:
Home Buying
Location:
California Los Angeles County Los Angeles
Tags:
los angeles home buyer tips
using a buyers agent
buying a lost angeles home

Comments 21 New Comment

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Rainmaker
862,908
Jane Peters
Connecting you to the L.A. real estate scene
Power Brokers Int'l

Michelle,  I don't know why our MLS uses that term.

October 25, 2012 09:47 AM
Rainmaker
507,620
Wayne Johnson
San Antonio REALTOR, San Antonio Homes For Sale
Coldwell Banker D'Ann Harper REALTORS®

Jane-Interesting how the terms for these situations are polar opposites. You've got the short sale or short pay for the lender and the potential buyer has to be in it for the long haul.

October 25, 2012 09:43 PM
Rainmaker
862,908
Jane Peters
Connecting you to the L.A. real estate scene
Power Brokers Int'l

Wayne,  I know.  Rather an oxymoron.

October 25, 2012 09:51 PM
Rainmaker
692,132
Juli Vosmik
Scottsdale/Cave Creek, AZ real estate 480-710-0739
Dominion Real Estate Partners, LLC, Scottsdale, AZ

Jane, patience is the word.  It's too bad a short pay or short sale is called that - there should be a better term - long sale, put on your straight jacket and buckle your seat belt sale might be more appropros. 

October 27, 2012 01:59 PM
Rainmaker
862,908
Jane Peters
Connecting you to the L.A. real estate scene
Power Brokers Int'l

Juli,  you are absolutely right.  Why that term is used is beyond me.

October 27, 2012 02:06 PM
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Rainmaker
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Jane Peters

Connecting you to the L.A. real estate scene
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A Los Angeles Realtor® specializing in absentee owners, out-of-town buyers and those needing extra assistance with one of the most important transactions of their lives. Just sit back and relax! You are in capable hands.

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