subject: What is the Short Sale of a Home? [print this page] What is the Short Sale of a Home? What is the Short Sale of a Home?
The short sale of a home is an alternative to foreclosure. For many homeowners, it is the most readily-available of foreclosure protection options. In this arrangement, the homeowner makes an agreement with the lender to sell the home off before foreclosure is necessary. The home will be sold for a realistic price, even if that price happens to be lower than the existing mortgage debt. The success of these sales is largely dependent upon the disposition of the bank and other involved lenders. Increasingly, lenders are more willing to undertake these arrangements.
The short sale of your home is a process that will require you to make your case in terms the lenders understand: numbers. A specialist in this field can help with this, but the basics are easy to understand. If you truly cannot afford your mortgage, your financial numbers will reflect as much. Confronted with this, banks have the option of either foreclosing or taking your offer to short sell the property. The short sell option actually costs the lender much less than does foreclosure, so they have a vested interest in pursuing a good deal if they're presented with it.
Understand that the short sale of a home is not an instance of extorting the lender or of either party doing the other a favor of any type. Facts are facts: If you don't have the money, you cannot pay the loan off. Some homeowners have to do this because of income loss, medical problems or simply having been given a bad mortgage. In any case, it's simply a case of the deal not having worked out, not a reflection on anyone's commitment to paying their debts or their character. Business always entails risk and a borrower not having the funds to pay back their debts is a risk that lenders take.
The short sale of a home is usually far less traumatic than a foreclosure. In a foreclosure situation, the home is taken away from you. In a short sale, you try to pay off as much of your mortgage debt as possible by selling the home for less than the total of the remaining mortgage debt. This is sometimes the best you and the lender can do and, for both of you, it has significant advantages. It will have impacts, of course, and it will affect your credit, but the damage is usually less than what should be expected with a foreclosure.
The short sale of a home is a good option for anyone who is in over their head. The reason that banks and other lenders agree to it is first, of course, to recover as much money as they can and, second, because a lot of people are in this situation now. It may be faster to get this deal through if you're with a small bank. Larger banks take more time, generally, and are sometimes more resistant to the idea but are increasingly willing to take it up.
