Short Sale is defined as follows: The lender agrees to accept a payoff for less than the balance of the mortgage to allow the sale of the property.

First of all you the property owner, the most important thing you must know and understand that you the property owner and seller of your home still own your home, you still hold the title to your property, and more importantly you still make the decision of what offers will be accepted or not. Your bank/lender does not own your property.

For example, a short sale occurs when your mortgage balance plus any costs in connection with selling your home exceeds the sales price of the home.  The lender(s) would have to approve the short sale thereby release the lien, forgive all or part of the shortfall of deficiency.

Short Sale for 123 Short Sale Drive

Why would lenders accept a short sale?

In essence, the cost lenders have to go through foreclosure may not be financially feasible to them as foreclosure proceedings, attorney fees can cost them tens of thousands of dollars.  Additionally, it cost the lender to maintain the home, market the property, pay for utilities and the costs to resale the foreclosed property.  Moreover, properties deteriorate resulting in an even lower sales price than with a short sale.

Although the lender’s main priority is their bottom line, when they approve a short sale, the decision is solely based on their financial examination.

Banks have taken some initiative to process short sales at an easier way as we have seen in the past, due to such a large inventory of negative equity and homeowners defaulting at a much higher rate than years past.