A short sale is a foreclosure prevention method. Unlike a foreclosure, the property is still owned by the seller. If you need a home quickly, a short sale may not be the right option for you. Financing a short sale is possible, provided you and the lender are willing to wait.

Do lenders like short sales?

Why Banks Would Prefer a Short Sale Over Foreclosure Banks are businesses and, just like any business, they are seeking to earn a profit. If it costs more to foreclose over agreeing to a short sale, the bank is very likely to favor the short sale.

Banks are businesses and, just like any business, they are seeking to earn a profit. If it costs more to foreclose over agreeing to a short sale, the bank is very likely to favor the short sale.

What does short sale mean in real estate?

In real estate, a short sale is when a homeowner in financial distress sells their property for less than the amount due on the mortgage.

Can a short sale negate the mortgage debt?

Short sales don’t always negate the remaining mortgage debt after a property is sold. This is because there are two parts to all mortgages: a promise to repay the lender and a lien against the property used to secure the loan. The lien protects the lender in case a borrower can’t repay the loan.

Is the lender required to do a short sale?

Before beginning the short-sale process, the struggling homeowner should consider how likely it is that the lender will want to work with them on a short sale by understanding the lender’s perspective. The lender is not required to do a short sale; it will be allowed at the lender’s discretion.

When is a short sale considered a deficiency?

The term “short sale” refers to the fact that the home is being sold for less than the balance remaining on the mortgage—for example, a person selling a home for $150,000 when there is still $175,000 remaining on the mortgage. In this example, the difference of $25,000, minus closing costs, and other costs of selling, is considered the deficiency.