Short sales are one option property owners who need to let go of their real estate can look into. These types of sales are where an owner works with their lender to sell the property as quickly as possible at a lower price than what’s owed, with the goal of helping the lender recoup as much as they can on the loss of a property, while allowing the owner to get out from underneath a financial burden.
Can a Short Sale Apply to a Commercial Property?
Short sales are not something to be entered into lightly. They do provide a way to deal with a property which is underwater or valued at less than what is owed should financial strife be an issue preventing an owner from continuing to make their mortgage payments. The housing crisis of 2008 led to many homeowners opting for a short sale over foreclosure. Can a short sale apply to a commercial property?
The answer is yes, you can seek a short sale of your commercial property. You do need to show proof of hardship, reflecting why you are no longer able to pay the mortgage on the property. Just as with a residential property, if a commercial property owner isn’t able to meet the payments, provided you can market the property at its current value, a short sale can be an option over foreclosure.
Being able to get at or close to the current market value of the property is key to getting lender approval and acceptance of a short sale; they want to recoup as much as they can after all. There’s one critical thing to keep in mind as a commercial property owner vs a residential owner however. It’s possible that your lender is more likely to take you to court for the remaining balance through seeking a Deficiency Judgment. This tends to be more prevalent with commercial properties compared to residential ones.
A Deficiency Judgment lawsuit can occur after a short sale and is an option for lenders to attempt to recoup more of the original loan. This is not to say it will happen, but it’s important if you’re considering a short sale on your commercial property that this could occur. Our goal in successful short sale negotiation is to have any deficiency forgiven.
If you’re facing financial distress and own commercial property, a short sale is one option to consider. Learn more about this and other options by contacting us.
When it’s time to sell or buy property, working with an experienced Realtor® who understands the local real estate market will make the process easier. I’m here and ready to get the conversation started with you. Call me today at 609-338-3773 or send me an e-mail. Myself and my team at The Haviland Group and Keller Williams Realty are ready to share our expertise and care for all your real estate needs.
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