What a Seller Needs to Know Before Trying a Short Sale

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A short sale is one of the ways that a homeowner can avoid having the lender foreclose on his home when the amount that he can sell his house for is not enough to pay off the mortgage. In the typical scenario, the homeowner has lost his job or his income has decreased to the point where he can’t afford to make his monthly mortgage payments. The homeowner is asking the lender to allow him to sell his home for whatever he can get and the entire proceeds of the sale (less the real estate broker commission, grantor transfer fee, and attorneys’ fees) are used to pay the lender. The lender agrees to accept whatever amount it receives as full payment of the mortgage. If the sales price is large enough for the seller to get any cash back at the closing, the short sale will not be allowed. The lender is calculating on whether it is better for the lender to approve a short sale or to foreclose on the property if the owner is not making monthly mortgage payments. Here is some information for sellers to understand before they try the short sale process.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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