What Is A Short Sale?
 
In simple terms, a short sale is the sale of a home for which the amount owed to the lender(s) is more than the amount that the home can be sold for.  Rather than requiring the homeowner to bring in money to close or pay the difference out of pocket the sale of the home is completed through negotiation with the existing lender(s) that results in the lender(s) accepting less than the full amount owed.
 
 

 
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A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the mortgagor. This agreement to accept a short payoff is all accomplished through negotiation with a bank's loss mitigation or workout department. The homeowner sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.
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