What is a Short Sale? You've heard the term on news programs, seen it in ads for homes, and still wonder, "What is a short sale?"
A short sale occurs when a home seller owes more on their mortgage(s) than they will get for the sale of their home. In other words, market value of the home is below what is due the mortgage holder. There will be a shortfall on repaying the mortgage, therefore the mortgage holder(s) will need to approve the sale and accept the short repayment.
A short sale can be a great alternative to foreclosure, for those who find that their mortgage payments have become unaffordable, and may have begun missing mortgage payments. In the Commonwealth of Virginia it is estimated that banks spend an average of $50,000 in attorneys fees to foreclose on a home. A short sale will transfer ownership of the home to the buyer without that legal wrangling and cost. All you need is the approval of the mortgage holder, accepting the short fall of the loan repayment. You can see the financial savings of short sale to a bank versus foreclosure.
You don't need to miss mortgage payments in order to qualify for a short sale. Short sales are also useful for sellers who are being forced to transfer to another state, or Country, by their employer. A job transfer is considered a hardship by most banks.
If you think you may have to list your home for short sale, find an agent to represent you who understands the process of short sale approval, and short sale contracts. An agent with a proven track record of success in closing short sales will know exactly how to help you through the process and will increase the odds of a successful short sale settlement.