What is a short sale?

A short sale in real estate refers to a situation where a homeowner sells their property for less than the outstanding balance on their mortgage loan. This is typically done as a last resort when the homeowner is unable to continue making mortgage payments and is facing the possibility of foreclosure.

In a short sale, the homeowner must obtain approval from their lender to sell the property for less than the amount owed on the mortgage. The lender will typically require the homeowner to provide documentation of their financial hardship and demonstrate that a short sale is the best option for all parties involved.

Once the short sale is approved, the property is listed for sale and interested buyers can submit offers. The lender must approve any offers, as they will be receiving less than the full amount owed on the mortgage. If a buyer's offer is accepted, the sale proceeds like a traditional real estate transaction, with the buyer closing on the property and the homeowner moving out.

Short sales can be a complex process and may take longer to close than a traditional real estate transaction. However, they can be a way for homeowners to avoid foreclosure and the negative impact it can have on their credit score. It's important for homeowners considering a short sale to work with an experienced real estate agent and a qualified attorney to ensure the process is handled correctly.