What is a Short Sale?
For many distressed homeowners, a short sale turns out to be the best solution available. Anyone who owes more on their home than it is worth can potentially benefit from a short sale. It wasn’t long ago that a homeowner would have found it difficult to persuade the bank to agree to a short sale, but times have changed. Because of the changes in the property market over the last five years, it is an option increasingly available to homeowners in trouble.
When a homeowner owes more on their mortgage than the property is worth, he is considered “short”. Sometimes this scenario is referred to as being “upside down” on your mortgage. It’s not an enviable place to be, though it is all too common. One option that may be open to a homeowner in this situation is the short sale. The short sale occurs when the homeowner negotiates with their lender to accept less than the full balance of the mortgage from a buyer.
In order to qualify for a short sale, the buyer will need to demonstrate to the lender that they have a legitimate reason for being unable to catch up to the mortgage. Financial hardship, including job loss, is often among the circumstances required by lenders. A regular monthly income shortfall—too many bills and not enough money—will also be considered by the lender. Some lenders will also want to see insolvency among the circumstances, meaning the homeowner doesn’t have the kind of liquid assets that could be used to pay down the loan.
Nothing in the law requires a homeowner to enlist professional help in negotiating a short sale, but going it alone is seldom advised. Unfortunately, it can be difficult to find unbiased sources of advice. At Texas Property Shop, we are committed to helping distressed home owners find a way out of a tough predicament. With as many options as are available to people facing financial difficulties, we don’t like to see anyone have their homes go into foreclosure unless it is a choice the homeowner has made. The sooner you know all of your options, the better you’ll be able to find a satisfying solution. When a short sale is possible, TPS can help you quickly find a buyer and execute the transaction.