Homeowners who can’t afford to continue paying their mortgage may want to try to get out from under it as quickly as possible. One option that some have is to go through a short sale on the home. This means that the homeowner sells the home at a fair market price, but that price is less than they owe on the home.
In order to complete a short sale on the home, the purchase must be approved by the mortgage company. Short sales are often an opportunity for a buyer to get a great deal on a home, but there are some considerations to think about before deciding to go this route.
Short sales usually aren’t quick or easy
Because the mortgage company has to approve the short sale, it won’t be a fast sale. The documentation may have to go through several layers of approval before a final decision is made on whether the sale can proceed or not. Denials are common in short sales because most lenders don’t want to lose money; however, they may be approved if the foreclosure process would result in a larger loss.
There’s often a great deal of back and forth about the terms of the short sale. Because the mortgage company would have to pay the seller’s closing costs, they may issue counteroffers as a way to increase what they’ll receive.
Sellers and buyers should ensure they fully understand the short sale process and the terms of these deals. Working with someone who’s familiar with them may offer additional protection since they can help you get a more thorough understanding.
