What is a Short Sale? This is the first of a six part series on Short Sale's.
A short sale happens when the lender is shorted on a mortgage, meaning the lender accepts less than the total amount that is due. If your mortgage is $100,000, but your home is worth, say, $90,000, you are $10,000 short, not including costs to close the sale such as real estate commissions, recording fees or title and escrow charges.
Sometimes, to avoid going through the costs of foreclosure, a lender will sanction a short sale by letting a buyer purchase the home for less than the mortgage balance while the home is in pre-foreclosure stage. A pre-foreclosure stage is one of the three stages of foreclosures.
Here are sample steps of a short sale:
* Seller signs a listing agreement with a real estate agent subject to selling as a short sale with third-party approval.
*The agent finds a buyer who makes an offer for less than the amount of the mortgage.
*Seller accepts the buyer's purchase offer.
* Seller's lender accepts the buyer's purchase offer.
* Transaction closes when the buyer delivers the funds, the lender releases the lien and the seller delivers the deed.