What's a Short Sale?
I've been asked numerous times to explain the term Distressed Property. One definition includes the status known as Foreclosure. Another category includes a status referred to as Short Sale, meaning the property owner has experienced financial hardship and can no longer fulfill the monthly mortgage obligation. Additionally, the value of the property is less than the mortgage balance. In other words, the owner is "upside down." Once the owner proves hardship to their Lender, the Lender may or may not choose to approve the Short Sale process rather than Foreclose on the property. Foreclosure is still an option for the Lender. This can be a lengthy process and typically the owner will put their home on the market during this Lender hardship analysis. Once the property is under contract, the Lender must approve the contract price - this can take up to six months. Once the property is closed, the Lender may choose, in reference to the Seller, to forgive the debt, file a 1099 with the IRS or make the previous owner sign a promissory note on the balance owed. To read more click here