Short Sale


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Short Sale

A method of gaining profit from an anticipated decline in the price of a stock.

An individual who sells short sells either stock or Securities that he or she does not own and that are not immediately ready for delivery. Generally the seller borrows the shares needed to cover the sale from a Broker and then delivers these shares to the buyer. The seller deposits an amount that is equal to the value of the borrowed shares with the broker. This amount stays on deposit with the broker until the stock is returned. The seller must ultimately return the same number of shares of the same stock to the broker, and the transaction is not fully executed until the stock is returned. The broker lending the stock is entitled to all the benefits he or she would have received if the stock had not been lent. When a dividend is paid, then the seller-borrower is required to pay the broker-lender an amount equal to the dividend.

References in periodicals archive ?
The second-quarter 2013 CoreLogic suspicious short-sale analysis update found that the suspicious rate for single-family short sales remains high at approximately 3.
A short sale occurs when the sale price for a property is exceeded by the amount of the mortgage owed on it.
For example, if a homeowner owes $200,000, a short sale might allow them to sell for $180,000, and the lender accepts $180,000 as payment in full.
Short sales are becoming more and more common in expensive areas as Long Island luxury homeowners try to escape the embarrassment of a foreclosure, the New York Times reported.
Last year Paddilla, managing broker at real estate firm Key Concepts, sold 42 properties that were either bank-owned or short sales.
Of primary interest to real estate agents, lenders, asset managers, and to a lesser extent, appraisers involved with short sale properties, Short Sale Rush provides a practical guide to sales techniques, checklists, forms, and procedures designed to improve the marketability of short sale and REO properties.
The title company must make certain that the new lender will be in a first lien position, and diligently examine the short sale transaction to make sure all steps are followed.
In the second situation, a taxpayer constructively "sells" the short sale on December 31 of a specified year by acquiring the same or substantially identical stock as the shares underlying the short sale.
Another strategy currently being used is the short sale of a similar security or a basket of securities that mimic the appreciated security owned.
Therefore, it should be much easier for short-sellers to find overpriced candidates for short sales than it is for long buyers to find cheap candidates for purchase.
Since the survey began in 2010, lenders have made some progress in their short sale processes, with 64 percent of California REALTORS([R]) expressing difficulty in closing short sales, down from 77 percent in August 2011 and 70 percent in 2010, according to the C.
A Fleming Island short sale will occur when banks believe the borrower is having a hardship, where their current financial situation does not allow them to pay the mortgage off or to continue making payments.