Short Sale

A short sale is a real estate transaction where the owner sells their property for less than the amount owed on the mortgage. This often occurs when a homeowner is facing financial hardship and the home's value has fallen below the outstanding balance on the mortgage.

Here's how a short sale works:

1. Financial Hardship: The homeowner, typically facing financial difficulties, can no longer afford to make mortgage payments.
2. Market Value Decline: The current market value of the home is less than the outstanding mortgage balance, making a standard sale unfeasible.
3. Lender Negotiation: The homeowner or their representative negotiates with the mortgage lender (usually a bank) to agree to a short sale. This means the lender accepts less than the full amount owed on the mortgage.
4. Sale of Property: Once the lender agrees, the property is listed, and a buyer is found. The home is sold, often at a price lower than current market value.
5. Debt Forgiveness: Once the sale is complete, the lender forgives the remaining balance of the mortgage. Sometimes, the lender might issue a deficiency judgment against the homeowner for the remaining balance, but this depends on the state laws and the terms of the short sale agreement.

A short sale can be a viable option for homeowners who can't afford their mortgage and can't sell the home for enough money to pay off their loan. However, it's a complex process that can have significant financial consequences, including impacting credit scores and potential tax liabilities. For this reason, it's important to consult with a real estate professional or legal advisor who specializes in short sales, like Icesis Cruz, before proceeding.