You’ve probably heard the term, Short Sale, at least once by now, in the news, or perhaps in some Real Estate Agent’s advertising. The term itself has been around for years, but is seeing more use recently with the rapid rise of foreclosure in the lending industry.
A Short Sale is the sale of a home for less than the balance of the mortgage loan, where the lender has agreed to settle for a lesser amount, and frees the initial borrower from the debt. It’s a way for a family who is experiencing a hardship in these tough economic times to “get out from under” their debt, save their credit, have time to repair any credit damage, and likely buy another home in about two years. This keeps a borower in a much better position than loosing a home to foreclosure.
It takes a bit of knowledge above the normal day to day real estate activity in order to make a smooth success of a Short Sale. The homeowner will have to write a Letter of Hardship to explain what has happened to create the hardship, and the lender will have to approve the Short Sale before the property can be sold. The homeowner must understand that they will receive no proceeds from the sale, but the advantage is that they will be able to repair their credit within a two year period, usually, and qualify for a new purchase long before a person who looses their home to bankruptcy.
