Law Office

Short Sales

Short Sales

A short sale is a real estate transaction in which a homeowner sells their property for less than the amount owed on the mortgage. This typically occurs when the market value of the property has dropped below the outstanding mortgage balance and the homeowner is unable to cover the difference. The lender must agree to the short sale as it involves accepting a lower payoff than what is owed.

Short sales are often pursued as a way to avoid foreclosure, as they can be less damaging to the homeowner’s credit and financial situation. However, the process can be complex and time-consuming, requiring approval from the lender and negotiations with potential buyers.

The basic procedure involves:

  •  Financial Hardship: The homeowner must demonstrate financial hardship, such as job loss or medical expenses, to the lender.
  • Listing the Property: The homeowner lists the property for sale and finds a buyer.
  • Contract/Agreement: Once a buyer is found, a contract is signed, contingent on the short selling lender’s approval.
  • Short Sale Package: The homeowner submits a short sale package to the lender. This typically includes a hardship letter, financial statements and other required documents.
  •  Lender Review: The lender reviews the short sale package and assesses whether accepting the short sale is more financially viable than proceeding with foreclosure.
  • Valuation: The lender may order an appraisal or broker price opinion to determine the fair market value of the property.
  •  Approval: If the lender approves the short sale, the homeowner can proceed with the sale to the buyer.
  • Closing: The sale is finalized, and the property transfers to the buyer. The lender typically forgives the remaining mortgage debt.

It’s important to note that lenders are not obligated to accept a short sale and may choose to pursue other options. Consulting with an attorney is recommended to fully understand the implications of this process and explore the best course of action for your individual situation.
If you need any assistance with a Short Sale, call our office at (352) 556-5105.