What is a Short Sale?
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. It is possible to have a short sale if your mortgage balance matches the sales price because there are still closing costs that will throw the sale into “short” territory.
Sometimes, to avoid going through the cost 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 (the bank) approval.
- The agent finds a buyer who makes an offer based on market value, which is often 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 READ MORE
- Banks offer Distressed Homeowners $10000 for Short Sale
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