In the simplest terms, a short sale is the process of selling property when the home is worth less than the outstanding mortgage balance. In other words, it’s “upside down”. The lender (or bank) has to agree to accept less than what is owed in order to close the sale.
This statement is full of stumbling blocks. The seller has to show the bank there is justification of why they can’t make the mortgage payment. This is called a hardship. Hardships have to be legitimate, such as a loss of a job, significant medical expenses, death of a spouse, etc. There will be what will seem like endless request for paperwork to be sent to the bank over and over.
Once the bank understands the justification they will want to “cut their losses” as much as possible but they will not give it away below what the prevailing market value is. Remember their in business to make money for their stockholders with NO emotional attachment to the home.
If you want to do a short sale either on the selling side or buying side, remember the bank is in control. After what will seem like a very long time and requiring a pile of paperwork, in their own time, they will accept the contract price, deny it or agree to sell it for MORE. Both the seller & buyer must have the patience of Job to complete a successful short sale.
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