What is a Short Sale?

A real estate short sale is an option for homeowners with a lot of debt looming over their property. It is an alternative to a foreclosure. If the outstanding debt to your property, including more than one mortgage or liens on your house, is more than what your house is worth, the short sale is for you.

In a short sale, your house sells for less than the total of money owed, with creditors and lien holders agreeing to accept less to satisfy the debt owed.

Real Estate Short Sale

Image via CFRE.com.au

Proving Your Financial Hardship

Before your mortgage company will agree to a short sale, they will investigate your debt. The loss mitigation department of your mortgage company will make every effort to get you back on track. If that is not possible, an application for short sale will begin.

An Appraisal of the Property

An appraisal of the property is done, sometimes by more than one appraisal company, to determine the actual value of the house. Factors such as the condition of the home and the fluctuation in the market are taken into consideration.

Additional Parties

Agreement of additional creditors is essential to a smooth short sale. Any creditor that has a lien on your property will need to agree to the short sale.

Consult an Expert

There are consultants, who, for a fee, will be able to tell you exactly what the impact of a short sale will have on your credit, your debt and your property. They will go over the risks you are taking with a short sale, and the benefit it will be to you.

Having to sell your home short is not an easy choice. It may be the only option for some homeowners. Being informed will help you make the right decision.