Wednesday, September 24, 2008

"Short Selling" vs "Short Sales"

Yesterday I got a call from a potential "Short Sale" seller who was confused. He had heard on the news that "short selling" had been banned by the government. He thought he might not be able to save his home from foreclosure because of this new law.

I knew immediately what he had heard. In fact, the news was about "short selling" stocks on Wall Street. On September 19, the Security and Exchange Commission (SEC) did in fact suspend short selling for 799 financial companies. When my customer heard the news, he said it was followed by a story about the mortgage crisis, so he "assumed" it was related to short sales of real estate.

What is short selling of stocks? In a nutshell, it is the "borrowing" of stocks by the short seller that he thinks are overvalued, selling the "borrowed" stocks at the high price, then buying the shares back when the price drops. The profit between the high price and buy-back price is pocketed by the short seller when he returns the stocks. The SEC banned short selling of the financial companies because of the thinking that the practice causes prices to drop more quickly, which would exacerbate the current national financial crisis.

"Short Sales" in real estate are when the owner of real estate sells the property for less than what is owed on the mortgage, and the lender accepts the "short" payoff. So, rest assured, you can still "Short SELL" your house.

It's Wendy!

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in real estate sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Copyright © 2008 By Wendy Rulnick. All Rights Reserved. *"Short Selling" vs "Short Sales"* Contact Wendy Rulnick regarding Destin Florida real estate and vicinity.

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