What Is A Short Sale?

What Is A Short Sale- Rapid Home Deals 352-480-0955

Good morning. It’s Friday and it is time for Fan Mail Friday, once again, where we answer questions from sellers, just like you. This week, our question comes from a seller whose house was in an estate. And we’re talking to the personal representative who’s trying to handle this estate. It had a reverse mortgage on it, and the house was not worth what the balance of the mortgage was. So the question was, what is a short sale?

A short sale is one alternative to a foreclosure. It’s where the house is sold for less than what is owed on the property. In a foreclosure, the lender initiates the sale. And a short sale, the borrower, the homeowner initiates the sale.

Now in a short sale, all proceeds will go to the lender because they’re not getting everything that they were owed to begin with. And the lender may also then file for a deficiency judgment for the balance between what the house sold for and what was actually owed. Now, in some states, the lender cannot file such a judgment. In those states where the lender can file a deficiency judgment, the realtor or the broker should ensure that there is language in the contract that does not allow the bank to apply for a deficiency judgment.

The lender must also agree to and approve any offer for the purchase of the home. So as you can see, there is more than just the seller, the buyer, and the realtor involved in the sale on a short sale. The lender is also involved in a short sale and must approve everything that goes on. It can be a frustrating experience, but the financial benefits to the seller is it allows them to get out from underneath the mortgage if they cannot pay with less long-term financial damage than an actual foreclosure.

So if you find yourself in one of these situations, give us a call at Rapid Home Deals, (352) 446-8559, or go to our website, www.rapidhomedeals.com. We are trained in short sales and we will be glad to help. And we’ll see you next Friday.
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