A Short Sale is the alternative to sell a property at a lower price than what the borrower owes, including the sale price approved by the lending financial institution. The lender forgives the difference between the amount owed and the amount for which the house is sold. The bank also covers the expenses related to the sale of the property including real estate agent commissions and closing costs. Both Short Sale and foreclosure have a negative effect on credit, however, the negative effect will be much less in a Short Sale.
Possible reasons to qualify for a Short Sale
- Deficiency (no surplus)
- Economic Insolvency/ Inability to Pay
- Debtor must be experiencing financial hardship («Hardship»)
- Unemployment (low income)
- Increase in debt
- Divorce
- Death
- Health/ Disability
- Relocation of employment
- Transfer of military service
A Short Sale is a worthy way to get out of a bad investment without long-term credit consequences, so in 18 months you can buy back your new property if you like. (It all depends on what your mortgage lender stipulates).
Important: You must certify with your bank if you qualify for a Short Sale.
