What is a Short Sale?
A short sale is a real estate transaction where the homeowner is selling their property for less than the amount owed on their mortgage loan. In a short sale, the lender agrees to accept less than what is owed on the mortgage, and the homeowner is usually released from any remaining debt on the property. Short sales usually occur when the value of the home has dropped below the amount owed on the mortgage, and the homeowner is unable to keep up with their mortgage payments. In these cases, the homeowner may be facing foreclosure, which can have serious financial and credit consequences.
How do Short Sales work?
To avoid foreclosure, the homeowner may decide to try to sell the property as a short sale. They would need to get the lender's approval to do this, since the lender technically owns the property until the mortgage is fully paid off. The homeowner would work with a real estate agent to list the property for sale, and any offers made on the property would be submitted to the lender for approval. The lender will typically order a property valuation to determine the current market value of the home, and they will consider the offer price in light of that valuation.
If the lender agrees to the short sale, they will take the proceeds of the sale to pay off as much of the mortgage balance as possible. In some cases, the lender may also forgive any remaining debt owed by the homeowner.
When should I consider a Short Sale?
Short sales can be a good option for homeowners who are struggling to keep up with their mortgage payments and who want to avoid foreclosure. However, they can also be a complex and time-consuming process, and it's important to work with experienced professionals, such as our experienced team at Meridian Title & Escrow, to navigate the delicate process.