People who are behind on their mortgage often try to find ways that they can either catch up on the payments or get out from under the house without too much of a hit to their credit. For some people, the answer is a short sale, but this is only possible in limited circumstances.
A short sale means that the house is being sold for less than the balance of the mortgage. Because of this, the mortgage company will have to agree to the sale terms. This is typically the case when the real estate market isn’t as strong as it was before, so the prices have dipped.
How does a short sale work?
The sale process for a home that’s a short sale isn’t quick. The seller will likely have to prove that they are facing a situation that makes a short sale necessary. This may be a divorce, medical expenses, job loss or similar circumstances.
The home must be listed at market value, but buyers might be able to get a good deal on the property. They should be prepared to purchase the home as-is because the lender likely won’t provide any concessions or handle any repairs.
Once the offer on the home is made, it has to be submitted to the mortgage company for approval. That approval likely isn’t going to fast, so the seller and the buyer both have to be patient.
Because of the investment that comes with real estate transactions, individuals on both sides of the situation should have someone on their side to review the documentation. This may help to prevent problems and misunderstandings with the contract.
