Definition of a Short Sale

A short sale can be a practical alternative to foreclosure for homeowners who need to sell, but owe more on their mortgage(s) than the home’s value. For most lenders and banks it’s less expensive and less costly to short sell a house than to take it through foreclosure.
In the past most lenders wouldn’t do a short sale. Well, times have changed, sharply declining market conditions and incentives from the government for lenders are such that banks are much more willing to negotiating short sales with homeowners who are experiencing a hardship. At the Chad Madlom Home Selling Team, we are seeing an amazing amount of bank approvals of short sales in past few months.

Here is a more detailed definition of a short sale:

• A homeowner is ’short’ when the amount owed on his/her property is higher than current home value.
• A short sale happens when a negotiation is entered into with the homeowner’s lender (or lenders) to accept less than the full amount of the loan at closing. A buyer closes on the home, and the home is then ’sold short’ of the total value of the loan(s).
• In most cases, the successful short sale results in a complete satisfaction of the lender’s debt for homeowners who have confirmed a hardship.
• Sometimes a bank will accept a short sale even when the homeowner has not missed a payment, they are just “upside down” in the value of the home and have a hardship.

WHAT QUALIFIES AS A HARDSHIP??

* Loss of job
* Reduction in income
* Business failure
* Damage to property
* Death of a spouse/family member
* Severe illness/ injury
* Separation/Divorce
* Mandatory job relocation
* Medical bills
* Military service
* Mortgage payment increase interest rate/terms adjustment
* Mortgage payment increase due to escrow adjustment
* Incarceration