Understanding a Short Sale

A short sale is a sale that aids individuals that are nearing foreclosure by the lending company accepting less than the amount owed on the loan. This process can and does help those that are willing to negotiate with the lending company, however, the lending company, bank, or Mortgage Company has to agree to this discount. The individuals that wish the lending company to agree to a short sale must prove they have financial problems and cannot pay their mortgage. The problems in most cases prove to be economic situations, hardships due to illness, or death in the family. If the home is sold in this manner all the money will go directly to the lending company, the homeowner will not receive funds of any type and will lose all equity in the home. The reason most individuals go with a short sale is to save their credit.

If you are considering a short sale, you may wish to talk with an attorney and of course a real estate agent that understands the negotiation process. The lending company will of course, want to receive as much money as they can that is still owed on the loan, as this is how the lending company stays in business. If all individuals defaulted on their loans or received a discount on their loan, the lending company would soon go out of business. This is why you need a professional on your side to help you with negotiations.

No matter how much negotiating you do, the lending company has the final say as to whether they will agree with the short sale. The lending company the majority of the times will agree to a short sale if you can prove financial hardship. If the lending company does accept the short sale, you may still be responsible for the remainder of the loan. In almost all cases with a short sale, the full amount of the loan is not met and the original homeowner will still have to pay the remainder of the loan.

If the original homeowners still owe money on the loan, this can be a problem for the new homeowners, as the lending company will hold the title until the remainder of the loan is paid. In too many cases, the lending company will not accept a short sale, as they believe the person can pay their loan or that they can still receive the amount owed on the loan through foreclosure and resale. However, the decision is often based on the real estate market in the area.

A short sale is actually negotiating with the lending company to get them to take less than you owe on your mortgage loan. If at all possible, the idea is get the lending company to accept the money received from a short sale as the full amount on the loan whereas, nothing more has to be paid to satisfy the loan. In most cases, during the negotiating the lending company will provide an amount they will accept to satisfy the loan. If this amount is not met, the seller will then have to pay the rest before the lending company will give the title of the home to the new owners.