A short sale occurs when the sales price of a property is not sufficient to pay the mortgage which is owed and the seller is not able to pay the deficiency out-of-pocket. The term “deficiency” refers to what is still owed to the lender after the sale of the property including interests, fees, penalties, etc. All short sales must be approved by the seller’s lender. In order to have the lender approve a short sale the seller must prove that the fair market value of their home is less than the balance owned on their mortgage note.
Sellers must bear in mind that approval of a short sale by the lender doesn’t mean that the lender waives the deficiency. In other words, the lender may approve a short sale but still be able to get a judgment against the seller for the what is owned to them after the sale proceeds. Making sure the deficiency is waived is one of the most important issues to address in the short sale process. This is one reason it is extremely important to find a qualified real estate professional to help you through the short sale process.
The short sale process is further complicated if there is more than one lender on the property. Your realtor would then have to negotiate the short sale with not only the first lender but also the junior lien holder (the second mortgage).
If you are considering a short sale of your home you should deal with a real estate professional that has a vast experience in short sales. Your realtor should be someone who handles many short sale transactions and has extensive education and training in short sales.
If you or anyone you know is considering a short sale please contact me. I can walk you through this process with ease.