The Mortgage Man

Get more out of your mortgage experience!

What Is A Short Sale?

A short sale allows you to avoid foreclosure by selling your home for less than you owe.

Short Sale to avoid forelcosure

A short sale is a term that describes the sale of your property when the mortgage holder agrees to accept a payoff that is less than the outstanding balance as payment in full. In a short sale, the lender agrees that in an effort to avoid foreclosure, they feel that accepting the lower payoff is a better financial decision than foreclosing on the home and selling it at auction.

Why would a lender agree to a short sale?

On average, a foreclosure costs the mortgage company $25,000 to $50,000. In addition to the legal and carrying costs associated with the lender holding a home in foreclosure, there is the liability of owning a vacant and abandoned home. If curious kids jump the fence, and one drowns in the pool, the liability falls on the owner (who in a foreclosure is the lender). But, first and foremost, lenders are not in the real estate business, they are in the money lending business. Any activity that takes away from that core business model costs time and money. If there is an offer on the house that is less than the current balance owed, it is very likely that the offer will at least be considered if it can be justified that accepting the offer is less costly than actually foreclosing on the home.

For more information on short sales and how you can avoid foreclosure through this process, visit PreForeclosureFSBO.com .

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