What is a Short Sale

There are a lot of complicated definitions of what a short sale is so let me try to give you one that is easy to understand instead.

A short sale occurs when a lender or lenders agree to allow a home to sell even though the proceeds of that sale are not enough to pay off the loan. Typically, the lender, which could be a first mortgage, a second mortgage or a HELOC (Home Equity Line of Credit) will also agree to pay additional costs such as attorney fees, commissions and sometimes even repairs for a new buyer on top of taking a reduced amount of money that does not cover the loan.

It’s not as simple as applying for a short sale though. The lender will not simply give you a short sale because you are upside down and want to get out of this mortgage so that you can get a new home. The lender is going to look for a hardship which can come in many forms. Some may be like the one I describe on my about me page or they could be due to a loss in income, health or various other reasons.

One thing is for sure though, short sales and short sale transactions are not like regualr sales and require specialized knowledge and training. Whether you want to buy one or you need to sel one, you want to work with someone who has taken additional training to become an expert in the field. It can often be the difference between a succesful short sale and foreclosure.