A short sale means that the proceeds of a property sale, along with any funds the homeowner can provide, are less than the amount that the homeowner still owes on the mortgage. Some lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the homeowner cannot make the mortgage payments. The rationale is that the lender can avoid a lengthy and costly foreclosure and the homeowner is able to pay off the loan for less than what is owed.
While the concept may sound simple, in reality, short sales can be quite complicated and pose a number of legal and financial risks, including your credit score being negatively impacted for future home or other purchases. If you are facing or even considering a short sale due to difficulty in making your mortgage payments, thoroughly researching all factors regarding your individual situation and considering all of your options is something you should do prior to taking any steps that could adversely affect you.
As a public service, the Northeast Florida Association of Realtors is happy to provide you with a Short Sale Seller Advisory. The Advisory alerts you to some of the issues and risks associated with short sales and provides resources and considerations that may be beneficial to you in making decisions regarding your home. For a copy of the Short Sale Seller Advisory, click here.