What is a Short Sale?
A short sale is a real estate transaction in which the proceeds from selling a property fall short of the balance of debts owed against a property. The homeowner can not afford to repay the liens full amounts, due some hardship(s) (whether financial, medical, and etc.) and the lien holders agree to release their liens on the property and accept less than the amounts owed. Any unpaid balance owed is called a deficiency. Short Sales do not necessarily release the borrowers from their obligations too repay any deficiencies or short falls, unless specifically agreed to between the parties. To ensure their is no repayment of short falls or deficiencies it is wise to have it in writing on the short sale approval(s).
Short Sales are used often as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower. Both often result in a negative credit report against the home owner.
Short Sales were very common after the housing crash in 2008. The majority of properties have recovered and have gained enough equity from being under water in 2015. However there are still some home owners that require a Short Sale today.
Any homeowner that may require a Short Sale, it is wise to consult with an expert in Short Sales. I did my first Short Sales in about 2001, well before the real estate industry even had knowledge of Short Sales. If struggling with payments or hardships have prevented you from making your mortgage payments,, there are alternative solutions.