Seller Short Sales
A Short Sale typically occurs when the owner of a home owes more on their mortgage than the property is worth. The owner will need to prove to the bank that they have a financial hardship that qualifies for a short sale. There are often two banks involved, one that holds the primary mortgage and one that holds the second. Agreement from both must be obtained.
Why would a bank agree to take less than what is owed on a mortgage? Foreclosure is an expensive and time consuming process for banks. Every case is different, but a short sale is usually preferable for both lender(s) and home owner.
Do you qualify for a Short Sale?
For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:
- Financial Hardship – Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.
- Monthly Income Shortfall – A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – The bank will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
- Is a Short Sale right for you?
- Pros: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. A short sale also keeps foreclosure off the individual's public record, and in many cases will allow the homeowner to avoid a deficiency judgment.
- Cons: Short sales can be a lengthy and frustrating process. Seek help from a qualified real estate agent to guide the way.