What is a Short Sale? Â
A short sale is when a homeowner owes more on a property than it is currently worth.  This is often an alternative to a foreclosure.  You enter a short sale when there is a negotiation between homeowner's mortgage company to accept a sale amount that is less than the full balance of the loan.  If the sale of your home falls short of the balance of debts, leaving a unpaid balance known as a deficiency. Â
The process of a short sale requires a lot of cooperation from the listing agent, buyers agent, buyer, seller, title company, attorney and appraisers. Â Without effort and patience for all parties involved, a short sale will not be possible. Â
 A short sale agreement does not necessarily release the borrower from their obligations to pay the deficiency on the loan. Â
Short Sale Process
In order for creditors to consider a short sale, most creditors will require the borrower to prove they are having economic or financial hardship that is preventing them for paying the deficiency. Â
All creditors that hold a lien against the real estate should be asked to take less than what is owed. Â This includes the primary mortgage, junior lien holders (second mortgages), home equity lines of credit lenders and home owners associations (HOA). Â
Many creditors have a loss mitigation department that will evaluate applications for approval utilizing pre-determined criteria for approving borrowers and the terms of the sale of the property. Â One portion of this process includes the creditor determining the current market value of the property by obtaining an appraisal, a Broker's Price Opinion or a Broker Opinion of Value. Â The most important part of this process is putting together a proper real estate short sale packing, including a detailed letter explaining their hardship and why a short sale is needed. Â
A short sale may take several months for the process from start to finish due to the multiple levels of approval. Â
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