What is a short sale when selling a house?

A short sale in real estate is when a financially distressed homeowner sells their property for less than the amount due on the mortgage. The buyer of the property is a third party (not the bank), and all proceeds from the sale go to the lender. In some states, this difference must legally be forgiven in a short sale.

When do you need to do a short sale?

When you owe more on your home than it’s worth and you need to sell, the transaction in which you will sell your property is called a short sale. You need your lender’s approval to do a short sale because they’ll be accepting less than they’re owed at closing.

How long does it take to list a house for short sale?

List your property: Once the lender has approved the short sale, you can list your property with a real estate agent. You’ll need to present any offers to the lender for approval. This process can take two weeks to several months. If you have a second mortgage, both lenders must approve each other’s terms,…

Who is the best buyer for a short sale?

As a buyer or seller you’ll want to work with one who has experience in getting these complicated deals done. Short sales are so fraught with missteps that many never get to the finish line.

What happens to my credit when I Sell my House in a short sale?

Once approved by the lenders, the short sale can close as soon as the buyer can get their loan approved, funded and closed. Typically, your credit score will drop by 75 to 200 points after selling your property in a short sale, which is less severe than a foreclosure.

What makes a real estate sale a short sale?

A short sale is the sale of a real estate property for which the lender is willing to accept less than the amount still owed on the mortgage. For a sale to be considered a short sale, these two things must be true:

Is the lender required to do a short sale?

Before beginning the short-sale process, the struggling homeowner should consider how likely it is that the lender will want to work with them on a short sale by understanding the lender’s perspective. The lender is not required to do a short sale; it will be allowed at the lender’s discretion.

What can I do to avoid a short sale?

Less disruptive alternatives to a short sale include loan modification and utilizing private mortgage insurance. Before resigning yourself to a short sale, talk to your lender about the possibility of a revised payment plan or loan modification. One of these options might allow you to stay in your home and get back on your feet.