What Is A Short Sale?

Many of my clients ask me, "What is a short sale?" The answer is pretty simple - it is the sale of a home where the seller's loan is more than the sales price of the home. When a homeowner gets in a short sale situation, they are often behind on their mortgage payments and have received or will soon receive a notice of default from the lender. In a short sale, a seller agrees to the terms of the sales contract and then the sales contract is submitted to the lender for approval. Right now, lenders are overwelmed with short sales and it can take a long time to review the sale documents. However, lenders are now approving short sales at a much greater rate because lenders have too many foreclosed homes on their books. A short sale is a way for homeowners to avoid foreclosure. Unfortunately, a short sale does have a negative impact on a homeowner's credit report similar to a foreclosure. (My source of this is the www.myfico.com site - if you do a search on foreclosures and short sales you will find the same information.) Generallly, short sales are priced below market so they can be sold quickly.