What is a Short Sale?
A “Short Sale” is a Real Estate transaction in which the agreed-upon purchase price for a seller’s property is not sufficient to pay off the seller’s total costs and expenses necessary to close the transaction and convey marketable title to the buyer. These costs and expenses may include such things as the loan balance, late fees, if any, recorded liens, taxes, encumbrances, commissions and other charges that would normally be paid from seller’s gross proceeds of sale at the time of closing (“total closing costs”).
So what does that mean, really? A short sale is a Real Estate transaction where the lender allows a property to be sold for less than the amount that is owed on the mortgage. The lender does take a loss on the loan.
Do I Qualify for a Short Sale?
A short sale does not just mean you are “upside down” in your home. There has to be a documentable hardship for a lender to be willing to take a loss on the loan.
o Have you missed or been late on any mortgage payments? Or is there foreseeable default?
o How far along in default are you? Has there been a foreclosure date set?
o Do you have a legitimate, documentable hardship?
o Are you prepared and willing to do the work it takes for a short sale? (gathering documents,
allowing marketing, responding for requests?)
o Do you have the ability to make any monetary contribution, in order to Fully settle your debt? (sometimes a lender will fully settle the debt with a small contribution from the homeowner, this is usually more applicable on the 2nd or 3rd loans)
Answering these questions just gives an idea of where on the timetable you and your property fall at. Answering no on these questions doesn’t necessarily mean you and your property won’t qualify.
There are lots of avenues for help for homeowners in distress. Do not hesitate to talk to anyone with any questions.
Making Home Affordable
**You should always consult with both an attorney and an accountant when considering a short sale on your house.**