Homeowners sometimes owe more on a home than what it’s worth. If they run into financial issues, they may need to determine how to get out from under the home. They may not want to go through a foreclosure, so they may explore the option of a short sale.
A short sale means that the lender allows the homeowner to sell the property for less than what’s owed on it. The lender takes a loss on the home because Arizona is an anti-deficiency state, which makes it hard for a lender to collect the remaining balance from the homeowner after a short sale.
Why would lenders entertain a short sale?
Lenders will consider the time and expense of a foreclosure compared to the loss they may take on a short sale. This can encourage them to accept the short sale as long as they get the amount they require from the sale of the property.
Unfortunately, the short sale process isn’t swift. It can take time for the lender to approve an offer, so the homeowner will have to prepare for that time. Sometimes, it can be difficult to find a buyer because of the expense of a home purchase and the fact that short sales usually include an “as-is” clause.
Both sides of a short sale should ensure they know their legal rights and what protections they have in these cases. This can help them to learn exactly how the real estate transaction will impact them, so they can make an informed decision before they proceed.
