The Joe Niece Team....The Results of Experience
What is a Short Sale What is a short sale?
A short sale is a complex real estate transaction in which the lenders allow a property owner to sell their property for less than the amount owed on the property. It is like a normal real estate sale, with a buyer and a seller, but in a short sale the contract between the buyer and the seller is subject to the third party approval of the lender(s) of the outstanding loan(s). The reason the real estate transaction is subject to third party approval is because in a short sale the lender must agree to write off or take a loss on the portion of the mortgage that is higher than the value of the home.
A short sale is a difficult residential real estate transaction to manage and get approved by the lender. It involves almost as much paperwork as it takes to obtain the mortgage itself, and generally requires the homeowner to prove a financial hardship as to why the short sale should be approved. Not all lenders will accept short sales or write off any portion of a mortgage. Often lenders are not satisfied with the payoff in the contract between the buyer and seller so there is much negotiation between the parties. The paperwork involved in a short sale is unique and each lender has different procedures in place for handling the transaction.
This seems like a difficult and arduous process, and it often is. However, a short sale is generally a better option for a current home owner than bankruptcy or foreclosure proceedings. This is because a short sale allows the home owner to sell the property and remove the secured debt associated with the home. Moreover, the seller can walk away from the sale with significantly less damage to their bottom line. A home owner who chooses a short sale typically experiences significantly less impact to his/her credit and can sometimes negotiate a full release from his/her mortgage obligation.
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