What is a short sale?

On Behalf of | May 16, 2020 | Real Estate

There are many ways to sell your home. Some deals will go better than others. You may not get a choice about how you sell your home. A good example of this type of situation is if you need to sell fast and must do a short sale.

The Street explains a short sale is when you sell your home for less than what you owe on it. This creates an obvious issue for your mortgage lender who knows that the sale will not result in it getting the full payment due on the loan. For this reason, you have to have the approval of your lender for any short sale deal you make.

Reason to do a short sale

You might decide to do a short sale on your home if you are having problems making your mortgage payment and wish to avoid foreclosure. It can help you to save your credit from the damage a foreclosure can do.

Challenges of a short sale

Since the lender must approve the short sale, it can make it harder to find buyers. The process is a bit longer than buying a home in another type of sale. In addition, the bank does not have to accept a short sale, so there is the potential that the buyer will invest time into a deal that does not pan out. Some buyers do not feel it is worth the time.

However, some buyers recognize that a short sale may offer them a good deal on a home. They may be willing to put up with the unique challenges of this type of deal if they can get a good price on the home.