Real Estate Explained | What is a Short Sale?
In today’s Real Estate market you may here the term “Short Sale” and you are probably wondering to yourself and afraid to ask “What is a Short Sale?“.
Well basically a Short Sale in Real Estate is when a sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments.
A short sale means the seller’s lender is accepting a discounted payoff to release an existing mortgage. There are no guarantees that the lender will accept an offer that the seller accepts so the process for negotiating a is a lot longer than normal sales. Be aware that the seller will need to be in default, to have stopped making mortgage payments, before a lender will consider a short sale. The seller might owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it. The Sellers need to provide a hardship letter to the lender and may be liable for taxes on the amount of debt that is forgiven.
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