A Short Sale real esate transaction occurs when a lender agrees to accept an amount less than what is owed on the mortgage to satisfy the seller’s loan. A lender may agree to this when a borrower is in danger of foreclosure and the lender wishes to avoid the time and expense of foreclosure proceedings. Lenders also may not want to own the property, and be responsible for maintaining it, and would prefer to sell it, even at a discount. Buyers in these transactions benefit because they may save money purchasing short sale properties. However, the short sale approval process can be time consuming, and buyers should be prepared to be patient.

When a property owner is in danger of foreclosure they can work with a real estate professional to find a buyer for the property willing to purchase it for the fair market value in today’s market, and then approach their lender with the purchase contract and other required documentation to inquire as to whether or not the lender will approve the short sale. Many lenders have departments that deal only with short sale approvals. Each lender has their own specific guidelines for what documentation they require in the short sale package they are given to review. It is important for a buyers and sellers to engage realtors and real estate attorneys with proven short sale experience to negotiate with the lender, to draft contracts and to close the deal, as short sale transctions are more complex than other real estate transactions.

A short sale can be a win-win for all involved. The seller gets out from under their mortgage responsibility(although sellers should ask the bank whether or not they will be responsible for any deficiency), the buyer gets a property at a reduced price, and the lender agrees to a loss it feels is less than the cost of foreclosure proceedings or property ownership.

Retaining a real esate attorney familar with short sales to assist throughout the process can make it a much more efficient and productive experience and help the chances of the deal actually closing.

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